GDC 2010: The State of Social Gaming

Justin Smith, Editor, Inside Network

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Social Gaming Market:
2009: $490 million
2010: $835 million

Most companies thinking of themselves of globalized, using advanced localization.  

Virtual goods market much more successful in the East. Many are moving over to Facebook and social gaming sstructure.
2008: $ 5 billion
2009: $ 8 billion

Three big players in US:
1. Zynga, 700-900 employees, a few 100m in revenue, growth 50-70%. 3x more DAU than #2.
2. Playfish, 250+ employees, 75m in revenue, purchased by EA in 11/09
3. Playdom, 300+ employees, 50m in revenue, #1 on MySpace


Current App Leaderboard
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* Farmville
* Birthday Cards
* Café World
* iHeart
others include  Fishville, Pet Society, Mafia Wars, YoVille, Restaurant City.

Others companies with quick growth:
* CrowdStar
* RockYou (content distribution, distributing widgets, large ad network)
* Slide (went from advertising and media to a business model)

Loads of interest from overseas, particularly China
Facebook is blocking China right now, but they are able to develop for other asian and western markets such as:
* Rekoo  Animal Paradise, Sunshine Ranch.
* Elex – Happy Harvest
* Five Minutes – Happy Farm
* Wooga – Brain Buddies
* 6waves – Adopting a publisher model.


The developer Opportunity and the Social Graph

FACEBOOK
* Facebook continues to grow – is the first truly global social network
* 400 million users and counting, 70% are outside USA. Europe has almost as many users as USA, there is a growth rate of 10% or more.
* Most Facebook users are over 25
* Rapidly evolving platform, with new rules every 6 months.
* Facebook Connect is bringing facebook to every website and device.  Referring to this concept as the ‘Social Graph’.
* Facebook Credits are coming soon.

Challenges
* Developers are spamming users too much – need to think their methods of customer acquisition and engagement.

MYSPACE
*  Whilst declining, it is #2 social gaming platform. Still has a very good monetary model.

OTHER GLOBAL SOCIAL NETWORKS
Hi5
Orkut
Friendster
Qzone
Bebo
VZ networks
Maktoob

 TWITTER
*  Justin doesn’t think twitter become a social gaming platform. Though there are some interesting RPG that have come and gone.

RISE OF VIRTUAL GOODS IN THE WEST
*  Started to really happen now – now it’s the major revenue model for western social game developers.
* There are a variety of direct payment methods
 * Offers still portion of purchases, but this is declining.
* Went from $300 million in 2008 to $1.6 billion in 2010 (projected)

A RUSH OF COMPETITORS
* It’s a good way to make money off IP online. Seeing new startups and viral thinkers but also seeing huge media companies get into the market. Many are interested in building or buying social games developers or games. They believe they can bring a lot to the table with the brands that people are familiar with. They believe that this gives them a competitive advantage.
 * In general we have not seen a lot of casual games succeed on Facebook, they don’t have good monetization principles.

PAYMENTS
* PayPal still dominant
* Mobile is increasingly important. Asia has a commanding lead, with Europe behind. USA is just getting started.
 * Other methods include pre-paid cards which are growing with platforms like Zynga PlayFish PayDom. This is arriving to the US retail market Q4 2009.

THE THE BIG ONES TO TAKE NOTICE OF :
 * Zynga
* Facebook Credits