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Study: Social Games To Generate Over $1 Billion In 2012

Study: Social Games To Generate Over $1 Billion In 2012

July 20, 2010 | By Eric Caoili

July 20, 2010 | By Eric Caoili
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Microtransactions will help social games generate more than $1 billion in 2012 despite growth in the sector slowing after this year, according to research from global media markets analyst firm Screen Digest.

The social gaming market has seen explosive growth in the past three years, making $76 million in 2008, $639 million in 2009, and a predicted $826 million this year. With that revenue growth, the number of new titles and gamers playing these releases have also increased dramatically.

Despite the substantial rise of revenues in this space, Screen Digest believes that growth will slow significantly after 2010. It says that converting free gamers to customers, growing spend from existing customers, and increasing its reach beyond Facebook will be key to the industry for continued growth.

The research group also examined three common business models for social games and apps -- lead generation/offers, advertising, and virtual currency purchases through microtransactions -- and found that the last group represents "the largest revenue opportunity" for developers through to 2014.

"Improving game design and cultivating a better understanding of conversion trigger points will enable social game operators to gradually increase the rate at which they convert free gamers to paying customers and also how much these customers spend," says Screen Digest's Games head Piers Harding-Rolls.

"This trend has already occurred in other microtransactional games markets -- massively multiplayer online games is the key example -- and Screen Digest expects the social games sector to follow this pattern providing ongoing market growth even across well penetrated markets and networks."

The firm's study also identified the global top five social game operators in 2009: Zynga, Playfish (now part of Electronic Arts), Playdom, Five Minutes, and SlashKey. It notes that these outfits held a combined market share of 56 percent in 2009, up from 38 percent in 2008.

Zynga, developer of Facebook hits like FarmVille and Texas HoldEm, naturally was the biggest social games operator with a total of 242 million monthly active users across its titles at the end of 2009. Its closest userbase competitor was Chinese studio Five Minutes with 73 million users, while its closest revenue competitor was Playfish.


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