In a new report issued by Parks Associates, the firm forecasts that the social gaming industry will increase it’s revenue by five times between 2010 and 2015. The revenue increase is fueled primarily by increased advertising revenues and virtual goods sales. According to Parks Associates, these driving factors have already pushed social gaming revenues north of $1 Billion in 2010, and they see the trend continuing. The research firm will be presenting the findings of their Social Gaming: Market Updates report at the upcoming Game Investment Conference in Austin, TX on the 13th of April.
“Gaming on social networks has quickly become the most visible category of online games,” said Pietro Macchiarella, Research Analyst, Parks Associates in a statement. “Right now more than 250 million people play games like Zynga’s CityVille and FarmVille on Facebook every month, and both game developers and marketers have taken notice. Big brands such as McDonald’s and 7-Eleven have carried out cross-promotions with existing social games.”
Macchiarella also points to improved user monetization is a factor contributing to the industry’s success. He notes that early entrants to the field missed key monetization and revenue opportunities, but rapid advancements in gameplay has allowed for more effective incentives for users to purchase virtual items. Examples include virtual tractors and seed, items that improve or enhance gameplay, as well as rare items (swords, shields, etc.) to build status.
“The most powerful asset of social game developers is the quantity of behavioral data that they can obtain from their games,” Macchiarella said. “The abilities to measure the efficacy of different gameplay mechanisms, to tweak game design in near-real time, and to test new models are advantages that traditional gaming companies will never have. Zynga’s huge market share is the best proof of the competitive advantage made possible by properly leveraging consumer data.”
Parks Associates’ report also addresses the 500-pound Gorilla in the room: In Game Advertising. The once “Holy Grail” that was to save the gaming industry has all but disappeared, or rather, highly evolved since it’s inception. A shift in focus towards branded games, sponsored items, communities, and “advertainment” options that are far better suited to their end goal, and have come around to enhancing the gamers’ experience rather than interrupt. Parks Associates points to this new model as further revenue opportunities for games makers.
As mentioned above, Macchiarella will present the firms findings during the Social Games session on Wednesday April 13th, at the Game Investment Conference. The session is slated to provide a detailed overview of the social gaming space, and looks at market drivers and inhibitors, competitive analysis, market dynamics, and an investigation of current monetization and payment methods.
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