August 10 , 2010

Social gaming market starting to mature

Explosive growth gives way to moderation

Social gaming revenues, which barely existed in 2008, have seen steep growth. Rising from just $76 million worldwide that year to $639 million in 2009, revenues are expected to climb to $826 million this year, according to Screen Digest.

This year’s 29% growth rate will slow to about 24% in 2011, and growth will continue steadily in the double-digits through 2014 as the market matures.

Revenues include consumer spending on microtransactions as well as game operator revenues from offers and advertising.

According to Screen Digest, the key to continued growth will be translating free, casual gamers into paying customers.

“Improving game design and cultivating a better understanding of conversion trigger points will enable social game operators to gradually increase the rate at which they convert free gamers to paying customers and also how much these customers spend,” said Piers Harding-Rolls, head of games at Screen Digest, in a statement. “This trend has already occurred in other microtransactional games markets—massively multiplayer online games is the key example—and Screen Digest expects the social games sector to follow this pattern providing ongoing market growth even across well penetrated markets and networks.”

Many social gamers continue to play without paying, but a sizable minority are purchasing virtual goods and other in-game content. Frank N. Magid and virtual goods company PlaySpan found in May 2010 that 29% of internet users in North America had purchased virtual goods in a social networking game.

Another survey by PlaySpan, in conjunction with researcher VGMarket, similarly found that 33% of online gamers had exchanged real money for virtual currency, items or content in a social networking game.

That study found the median amount spent per year on social networking games was $50, which exceeds median spending on less casual online games like massively multiplayer role-playing games ($40) and console games with an online component ($20).