Social networking games are the latest phenomenon in the gaming industry. In fact, one out of every five Americans over the age of six has played a social network game at least once. That’s over 60 million Americans in total, and an average of 10 percent spent an astounding $2.2 billion in 2009 and the market is anticipated to grow to over $6 billion in 2013.
Social games have made an incredible impact on social network revenue streams — a welcome addition to somewhat meager ad dollars. Facebook, for instance, is valued at $50 billion but saw only $1.86 billion in ad revenue. Virtual goods and social gaming have potential to bridge the revenue / value gap and reduce social network’s reliance on VC funding.
The selling point for social networking game developers is the return users. As we can see from World of Warcraft and other online games that require payments for continued or an enhanced user experience, games encourage users to come back and get more. The best social games saw 41 percent of their paid users repeating their purchases and an average user spends $74 every four months.
Very much how the Wii brought non-traditional gamers into the fold, social games are also bucking the traditional gamer demographic. The majority, or 53 percent, of all online social network gamers are older women, around 43 years old. Of that particular social gaming demographic, 83 percent have played roughly six social networking games.
So what games are leading the online social gaming trend? One of the hottest stars is Zynga’s Farmville. The Facebook social game has 65 million worldwide users and 20 million play on a daily basis. EA recently acquired the social gaming company, Playfish, for up to $400 million to gain some share of the emerging market. Playfish’s Pet Society sells a reported 90 million virtual goods daily — for a total of 32.85 billion virtual goods annually.
Social gaming is a cottage industry in its infancy. As social gaming becomes more pervasive, revenue from virtual goods and advertising within the games is expected to skyrocket. So much so, even if Facebook were to capture half of the expected $6 billion in social gaming revenue in 2013, it would rival its traditional display advertising. The emerging industry also presents an opportunity for brands and entrepreneurs to develop, promote and sell games to a growing game-hungry social media audience.