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The State of Social Gaming
GDC - San Francisco
9 March 2010
Justin Smith
justin@insidenetwork.com
News Inside Facebookwww.insidefacebook.com
Inside Social Gameswww.insidesocialgames.com
Research Inside Virtual Goods: The Future of Social Gaming 2010Inside Virtual Goods: The US Virtual Goods Market 2010www.insidevirtualgoods.com
Annual Conference
Inside Social Apps 2010: Bringing Together Leaders in Social Games and Virtual GoodsSan Francisco | 20 April, 2010www.insidesocialapps.com
Focused on the Facebook platform and social gaming ecosystem
The Social Game Landscape
The Western Market
2009: $490 million
2010: $835 million
Growth on every continent
Virtual Goods in Asia
2008: $5 billion
2009: $7 billion
Source: +8*
The Big 31. Zynga
700+ employees $200+ million in 2009 ~3x more DAU than #2
2. Playfish 250+ employees ~$75 million in 2009 Acquired by EA
11/2009
3. Playdom 300+ employees ~$50 million in 2009 #1 on MySpace
The ContendersCrowdStar
Quick rise to #2 on Facebook by DAU
RockYou Operates the largest
ad network on Facebook as well
Slide Was long time #1 by
MAU (but not games), transformed business into virtual goods model
The International Players
Rekoo – Animal Paradise, Sunshine Ranch
Elex – Happy Harvest
Five Minutes – Happy Farm
wooga – Brain Buddies
6waves – Adopting a publisher model
The Developer Opportunity
Facebook continues to grow around the worldFirst “truly global” social network
Business models converging on virtual goodsCan rapidly spend, test, and iterate for revenue
Some challenges lie aheadMarket getting more crowded, network effects
kicking in
Social Gaming Distribution
Facebook 400 million users and counting – 70% of
which are outside the United States
Rapidly evolving Platform – new rules every 6 months
Facebook Connect – bringing Facebook to every website and device
Facebook Credits – coming soon
• Africa: 10M
• Asia: 70M
• Europe: 130M
• North America: 140M
• South America: 35M
MySpace Used to be #1, now
declining slowly
Still #2 social gaming platform in the US
Good ARPU, but only the largest developers can afford to build cross-platform games
Global Social Networks
Hi5
Orkut
Friendster
Vkontakte
QQ/Qzone
Bebo
VZ networks
Maktoob
Twitter Is this a social
gaming platform?
I don’t think so.
Game Portals
What is the value of your portal’s social graph vs. Facebook’s social graph?
Game Changers
Facebook Connect Now, the same social
graph is on any website, platform, device (mobile!)
Same identity and “viral channel” access, less Facebook.com constraint
What parts of the Internet never developed because the social graph wasn’t available?
Rise of Virtual Goods in the West
Now the major revenue model for western social game developers
Variety of direct payment methods
Offers still portion of purchases, but declining
Rush of Competitors
“Social media/widget” developers
New startups
Traditional publishers
Casual game developers
Asian developers
Monetization
Direct Payments Inside Social
GamesPayPal still dominant
Mobile increasingly important Asia with a commanding
lead, Europe just behind, US just getting started
Other alternative direct methods, like pre-paid cards, growing Zynga, Playfish,
Playdom arriving in US retail Q4 2009
Performance Ads and the Offers
Controversy Represent a minority of
social game developer revenues – now smaller %
Some ads were deceptive
Self regulating pretty well, though platforms have most leverage
Ultimately, developers need to get users monetizing directly pretty quickly
Increasing Competition
Many new offer providers in the last 12 months Regional focus Ad networks bringing
relationships
As offers become smaller part of the market, becoming payment aggregators
Organizing & Optimizing
Monetization becoming horizontal in some multi-studio companies
Some developers make multi-month content plans before releasing
Virtual economy optimization is now a core competency
The 12-18 Month Horizon
The Big 1: Zynga From 0 to 10 million in
7 days – rinse and repeat Tough to defend
against…
The increasing value of cross promotion
Smartest ad spenders behind LTV
Will have more staff than Facebook in 2010
Facebook’s Relationship with
Developers The only constant is
change
4 weeks ago: Email sharing
2 weeks ago: The death of notifications
What’s coming next month?
Changing Monetization
LandscapeFacebook Credits coming
soon – but what will the rules be? Fees? Restrictions for other
providers?
Banner ads hanging around
Who will challenge Facebook?
Is Facebook going to keep steam rolling social networks everywhere? Where will the carve-outs be, even where
Facebook is far and away #1?
Who is going to challenge Facebook’s social graph? Other games portals? Consoles, or device manufacturers?
2010 and Beyond
Facebook grows to 500, 600, 700 million…
Virtual goods become “normal”
International opportunities grow
Who will be the next CrowdStar?
News Inside Facebookwww.insidefacebook.com
Inside Social Gameswww.insidesocialgames.com
Research Inside Virtual Goods: The Future of Social Gaming 2010Inside Virtual Goods: The US Virtual Goods Market 2010www.insidevirtualgoods.com
Annual Conference
Inside Social Apps 2010: Bringing Together Leaders in Social Games and Virtual GoodsSan Francisco | 20 April, 2010www.insidesocialapps.com
Focused on the Facebook platform and social gaming ecosystem
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