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Social, casual market dominated game investments in 2011, report says
Social, casual market dominated game investments in 2011, report says
February 27, 2012 | By Tom Curtis

February 27, 2012 | By Tom Curtis
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    6 comments
More: Social/Online, Business/Marketing



It's no secret that the social market has seen some rapid growth over the last few years, and according to investment bank Digi-Capital, the social and casual market accounted for roughly half of all game related investment and merger value in 2011.

In the company's recent Global Games Investment Review 2012, it reported that social and casual games made up 57 percent of the game industry's investment value, and 45 percent of its mergers and acquisitions value.

Digi-Capital further explained that major companies like Wooga and King.com are performing well in this crowded market, but the company expects that consolidation will become more popular in 2012 as the space becomes increasingly competitive.

Looking back at investment patterns in 2011, mobile gaming was the second most popular market in terms of investment value (30 percent), but remained relatively low in terms of mergers and acquisitions. Digi-Capital said that mobile-related merger numbers remained low since the market is still quite young.

MMOs, on the other hand, were the second post popular in terms of mergers and acquisitions (31 percent), but investment value remained low due to the high risk nature of these large-scale products. Digi-Capital expects MMO related mergers to continue in 2012 as the market shifts toward free to play business models.

With this noted shift toward social and mobile gaming, Digi-Capital encouraged traditional game publishers to invest in these sectors to maintain steady growth. The company particularly pointed to EA's PopCap and Playfish acquisitions as prime examples of a large publisher transitioning into these growing markets.

Looking several years ahead, Digi-Capital projects that online and mobile games will generate as much as $41 billion in 2015, pushing the overall video game software market past $82 billion during that year.

Last year, Digi-Capital published a similar report, noting that video game investments doubled in 2011 compared to 2010, with that growth primarily driven by social, mobile, browser, and cloud-based gaming.


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Comments


Harry Fields
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There's gonna be some disappointed investors methinks.

Joe McGinn
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Can you say "bubble"? It's been going on longer than 2011, it's been at least two years you can't get one penny of VC money without the word "social" in your pitch. All bubbles do one thing, eventually...

John Paul Zahary
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These are all "investments" as people point out. There was even talk that Zynga investors should still be watching at this point.

I agree that there is a bubble in this market.

John Paul Zahary
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"Investments" is the key word - people are still watching to see how these are going to trend.

Reports have been sketchy on Zynga as well to keep on eye on them...

I do believe that there is a bubble in this market.

Christopher Enderle
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Hopefully, when the bubble bursts, "traditional" games aren't taken out in the fallout. It seems like it would be far to easy for the investment community to declare games "dead" rather than admit that they don't understand the market and that their projections were baseless.

Samantha Kay
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Interesting to see how much the new-found popularity of social media has affected gaming in general. Sure, teens have been blogging to each other for years, but that never affected any market until recently. Seems like a good trend to me, since adding the social aspect to gaming makes it a lot easier for developers to hear what consumers have to say.


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