Facebook & Co: A new goldmine for game publishers

Mar 18th 2010 at 13:07 by Martin Herdina

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The good news for all those who are not Mark Zuckerberg is that you don’t have to own a popular social network to get your share. You do not even have to come up with a new business model or a brilliant idea like Zuckerberg (and some of his fellow students) did. Social media already exists. All that game publishers have to do is benefit from the popularity of Facebook, MySpace and co.

Last year virtual goods generated revenues of more than $6 billion worldwide. A big driver for these increasing numbers is casual games, browser games and social games, all characterised by low technology barriers, easy gameplay aspects and a strong focus on community and social interaction.

The fact that the steady growth of the virtual-goods-based revenues coincides with the increasing popularity of social networks is anything but random. Casual games are very popular amongst members of social networks. The main task for game developers and publishers is now to get to know their newest target group as good as possible.

The times when only kids, students and computer freaks played online games are history – not only, but also because of Facebook and other social networks. In the past, most women weren’t particularly interested in video games at all. When I was a boy, friends and I spent endless hours in front of a box called C64 trying to find hidden doors in a mansion whilst the girls were talking to their friends on the phone or at the nearby ice cream parlour. Nowadays, the same girls interact on Facebook, asking their friends if they want to meet later on for a real drink – or if they can take care of their virtual fish bowl whilst they are escaping the winter on a sunny island in Thailand. 

Considering that women have always loved to interact, it isn’t much of a surprise that the average social gamer is not a schoolboy but a woman in her forties. A survey conducted earlier this year shows that 55 per cent of all social gamers are female, that the average age of social gamers in the UK is 38 (48 in the US), and that only six per cent of all social gamers are aged 21 or younger. But female gamers do not only outnumber their male counterparts, they also play more frequently: 38 per cent of female social gamers play several times a day (male: 29 per cent). And nearly two-thirds of all social gamers play at least once a day whilst 95 per cent play multiple times per week.

To cut it short; Social games represent a unique opportunity for game publisher to reach hundreds of millions of consumers who have never been on their radar before. In North America and the United Kingdom alone, the estimated social gamer population is approximately 100 million. For 2010, industry experts predict revenues of more than $1 billion US in the social games sector.

Nevertheless, it is unlikely that the majority of social gamers would ever subscribe to a game which is based on a monthly fee – especially right from the start – like hardcore gamers do. But 32 per cent of social gamers say they are likely to purchase virtual goods with real-world money and 28 per cent already have done so. Taking into account that any given day about 50 per cent of Facebook’s active users (200m that is!) log on to the website and that there are even more social networks like MySpace and Friendster, the potential behind these figures becomes obvious.

In other words: Social networks are a new goldmine for game publishers. Those who already jumped on the bandwagon are making a fortune. Zynga’s Farmville attracts millions of players day after day. According to the company their customers have built more than 40 million virtual farms, which is more than 20 times the number of actual farms in the US. On an average day, they purchase 500,000 tractors to till their land – a number even John Deere would take pride in.

With a revenue of $100 million US in 2009, Zynga is the market leader for Facebook-based games. Playfish, Europe’s leading social games publisher, is another giant of the industry. But every company can get their piece of the pie – not at least due to the 18 million new members who join Facebook every month. Berlin-based wooga has hit the consumer’s taste with games like Brain Buddies. Wooga’s social games have been played by more than 10 million users already – although the company was founded only in January 2009. And as the average social gamer plays six different social games, even new game publishers as well as smaller ones have a good chance to make some good business – without having ever studied at Harvard.