 |
|
|
| |
Analyst: Social Game Revenues To Hit $1.3B In 2010
by Eric Caoili [PC, Console/PC]
|
|
| |
|
February 1, 2010
|
| |
Lazard Capital Markets analyst Colin Sebastian shared several predictions for the social gaming market based on data provided by CrowdStar chairman Peter Relan, including insights on Facebook Credits, Apple's iPad, and his firm's forecast that worldwide social game revenues (virtual goods, advertising, and offers) will nearly double in 2010 to $1.3 billion.
In a conference call with LCM, Relan noted that 1-3 percent of social game users convert to paying customers, and that the top paying demographic for CrowdStar's Happy Aquarium consists of women aged 35 and up.
Based on that information, Sebastian commented, "We believe that there is significant runway remaining for social games to grow assuming continued distribution growth (on Facebook, smartphones, browsers and other social networks) and increasing conversion rates in other demographic groups."
Relan indicated that social game developers will continue to focus on producing their titles for Facebook due to its scale, grown, and monetization potential, while the iPhone will serve as a platform for "product extension" opportunities, at least until there is more functionality for microtransactions and virtual goods on the handset.
He added that he expects to migrate CrowdStar's iPhone games to the iPad, and that the larger screen will encourage "a new breed of casual and social game applications."
In regards to Facebook Credits, Sebastien advised investors to expect the widespread launch of the social network's universal virtual currency. He noted, "The launch of FB Credits is expected to generate a sizeable take rate for Facebook in the 30 percent range vs. 5 percent - 10percent for alternative payment options." CrowdStar, which uses the payment platform, however, expects that "diminishing payment friction and increasing conversion rates will ultimately offset the loss in revenues."
Sebastien noted that console games might not be as relevant in the social space, and that console-to-social ports could be risky considering the differences in user demographics: "Social game users care more about the social mechanics of a game instead of the depth and quality of game play, which is inverse to console game players. Other than EA, we note that legacy game publishers have very little penetration in the social networking segment of the market and are likely to invest in these platforms this year.
The analyst also warned against application fatigue, citing it as a "key risk" for social game developers and publishers to keep in mind. "Given the relatively simple game play, the sometimes fickle users, and the social dynamics of the game play, application fatigue is a key risk for social game companies unless companies focus more on innovation and game quality," he said.
You can see a chart of Lazard Capital Markets's 2010 growth forecasts for different spaces ares of the online game industry (e.g. China Online growing 25 percent to $5.6 billion, virtual worlds and casual MMOs growing 35 percent to $1.4 billion, and iPhone games and applications growing 25 percent to 1 billion) below:
|
| |
|
|
If social Games are going to make $1.8 Billion in 2010 it is not going to doing it on the backs of yet another Mobster, Vampire, Farm clone. Innovation, quality design &mechanics, depth of play combined with good social mechanics will drive sustainability and growth in social games.
However, i do agree that it may not be appropriate to put them in the same class as a more traditional video game.
And on "Social game users care more about the social mechanics of a game instead of the depth and quality of game play", just like you can't compare a comedy movie with a CG heavy Sci-Fi movie directly, you really can't say that "Avatar" is a much better movie than "American Pie" and that Avatar is of higher quality and blah blah blah.
Social games have it's depth, Colin Sebatian may need to dig deeper in these games to find them.
Games are entertainment. They have different purposes for different people. Just because some of us don't enjoy drama movies does not mean everyone doesn't.