With the explosion in social gaming that’s occurred over the past couple of years, The State Of Social Gaming, social games specialist Justin Smith’s overview of the social gaming landscape, could do little but recognise Facebook’s dominance over it, with a userbase of 400 million and counting.
He identified the US market having grown from US$490m in 2009 to a projected US$835m this year, but it’s expanding in every continent. For example, even the maturer Asian market for virtual goods grew from US$5 billion in 2008 to US$7 billion in 2009.
The big three operators in the west , of course, remain Zynga, with Smith’s estimate of a US$200m-plus revenue in 2009, Playfish at around US$75m and Playdom with 50m. But the gold rush means that various new contenders are on the scene too, with Smith identifying CrowdStar, previously photo-sharing specialist RockYou, Slide, creator of early Facebook apps leader SuperPoke, as particularly promising.
In particular, Slide’s move from a advertising-led business model to one based on virtual goods shows how central the virtual goods market is becoming in the west. But though the market is demonstrating huge innovation in revenue models, the games themselves seem rather more moribund if the names of the most promising new social games Smith presented are anything to go by: Happy Harvest, Happy Farm, Sunshine Ranch, Animal Paradise…
Business changes are surely a product of a fast-moving landscape - Smith explained that Facebook imposes new rules on its developers every six months, as it rushes to ensure Facebook remains attractive to its users. He put the blame on developers, explaining that their tendency to exploit Facebook for their own goals and not thinking of the platform as a whole necessitates the changes. Developers need to rethink their user acquisition processes, he said.
New developments on Facebook which will best define its future, Smith said, are the existing Facebook Connect, with allows outside sites to interface with the platform, and the upcoming Facebook Credits, a Facebook currency which circumvents the turbulent waters of thirdparty companies in favour of a more trusted, smoother experience for users for Facebook transactions. But with Facebook taking a relatively high 30 per cent of currency spent by users, the business proposition to developers isn’t straightforward, and the finer points of how it will work are still to be seen.
Until Facebook Credits officially launch and take shape, PayPal is dominant. But developers are already taking monetisation into their own hands, with Playfish and Zynga now selling pay cards at retail. Increasingly, Smith said, developers are changing to make monetisation a core part of game development.
MySpace, Smith noted, is still the second largest social gaming platform, even as it continues to experience slow decline, while other platforms across the world - Hi5, Orkut, Friendster, Bebo, Maktoob - provide a subset of alternatives to the dominance of Facebook.
With 70 per cent of Facebook users living outside the US, and the variety of social networks outside English-speaking countries, it’s clear that developers must think internationally, but Smith illustrated the difficulties of this with the anecdote of a developer who was asked by south American users why its game was featuring snow during winter. Producing a game with global reach is not simple.
Social games are still experiencing a rush of new competitors, from new startups to established publishers, said Smith. They’re increasingly also being seen as a way of developing IPs and establishing new ones - look to Playfish’s acquisition by EA and its move to develop EA properties on social networks.
The big question remains Facebook, concluded Smith. What’s going to challenge its hegemony? Until a viable opponent emerges, however, developers can at least concentrate their efforts on a single platform - even if the challenges of thinking globally and the process of making money are still very much in flux.