Social Gaming beyond Facebook!
In 2009, an estimated $2.2 billion in virtual goods were sold to consumers globally, and that number is expected to rocket to over $6 billion by 2013.Social games not only represent a lucrative new revenue channel for social media sites but they also signal a fundamental change in the structure of the social media industry. Social networks can no longer afford to rely solely on advertising revenue—they must master the intricacies of directly monetizing their users via virtual currency, virtual goods, and social games.
Social gaming got its start in mid-2007 with the launch of the Facebook Platform. Facebook has grown from 27 million unique monthly visitors to over 500 million unique monthly visitors, and over 70% of those visitors engage with applications every month. Last year, social games, one of the most popular forms of social application, generated over $500 million in revenue — the majority of which came from social games on Facebook.
Although Facebook holds the dominant position in the social networking industry, the site makes up less than 30% of worldwide unique visitors to social networks. There are nearly 40 social networks with over 10 million monthly uniques and nearly 150 with over 1 million monthly uniques. The companies that make up the “other 70%” of social networking traffic are just beginning to realize the engagement and monetization benefits of social games. Some sites have made social gaming a central part of their strategy and are seeing significant growth despite the fact that more and more users are still being drawn to Facebook.
When it comes to social games, smaller social networks, paradoxically, often have the benefit of size. Users of multiple social networks tend to split their time between Facebook and another social network. To these users, Facebook is an indispensable communication tool, but the other social network is essentially the local pub.Social games are the perfect addition to these communities. They provide a lightweight, social form of entertainment that enriches the interaction of a site’s users. As a result, social games on smaller social networks often meet or exceed the ARPU (Average Revenue Per User) observed on Facebook. And, unlike advertising, which detracts from the social experience of a site, a successful social games strategy will simultaneously increase a site’s stickiness and significantly increase revenue.
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