IHS: Facebook has peaked

The Facebook gaming honeymoon is over, according to market analyst IHS Screen Digest, with a decline in user numbers and increased competition meaning it is now much harder for game developers to succeed on the social network.

The claim comes from a new report, Facebook Gaming 2011 Market Monitor, which notes that at the end of 2010, half of Facebook monthly active users (MAUs) were gamers. By the end of last year, that had fallen to just 25 per cent.

Even Zynga is feeling the pinch: the company's MAU count fell from 266 million at the end of the third quarter to 225 million by the end of the year. Part of that decline can be attributed to a change in the way Facebook counts users; previously, Facebook members were treated as an active user the minute they landed on an app's permission request page, even if they declined.

With increased competition on Facebook, it is now harder than ever to attract users, forcing developers into cross-promotional activities or direct advertising. In other words, the cost of user acquisition is rising; no great problem for the likes of Zynga, perhaps, but a genuine barrier to entry for smaller studios trying to gain a foothold.

Senior analyst for games Steve Bailey said: "Facebook rocketed to prominence as a gaming platform in 2009 and 2010. However, with equal speed, the market then settled into a state of maturity in 2011, with conditions becoming markedly more challenging for game operators.

"While Facebook remains a worthwhile opportunity for companies able to meet those challenges, the tone of the market in 2012 will be somewhat muted compared to the optimistic outlook of the past few years."