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Social Network Games 2012

C A SUAL G AME S SEc TOR REP OR T

What are social network games?


Social Network Games run on a Social Network. They typically require the player be online, run embedded in the social networks pages, and use social features as deeply integrated gameplay elements.

The Players
Female

SOcIAL NETWORK GAMES

social network games - average player

40 years old

Social games revolutionized the western games industry. Solitaire, Bejeweled, and Mystery Case Files attracted millions of players in the last decade. As these games migrate to social networks, mainstream consumer gameplay habits are nally fully visible.

console games - average player

Male

37 years old

U.S. social network gamers audience (in millions)

2010

57.4

2011e

69.2

2012e

77.9

Social Gaming Report 2012 CA S UA L G A M E S A S S O c I AT I O N

The Payers
The name of the game is free-toplay with most social network games using a freemium model of distribution and monetization. A freemium game is free-to-play, but players pay to purchase optional upgrades, extra content, virtual goods, in game currency, power ups, and other premium features. Only 1% - 5% of a social games audience purchase virtual items, but this source dominates most games revenue streams.

How Social Games are Monetized


social games revenue stream

Top Developers & Publishers


The top 10 content providers reach more than half of the total gaming audience on Facebook. Social Network Games require careful user research, economic tuning, and technical demands not typically encountered during casual game development. Successful social network content providers must also deal with the additional complexity of maintaining and evolving a live service. When examining this market, you must look beyond Monthly-Active-Users and Daily-Active-Users (MAU, DAU). In the retail market, price points are well known and monetary success is directly proportional to products sold. In the online world, with widely varied Average Revenue per User (ARPU) depending on game type, quality, and monetization technique, the audience size is not always an indication of business health. Furthermore, seemingly identical games may have very different revenue markers and player retention. This makes it very difcult for an external observer to estimate a games success. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Zynga Electronic Arts wooga 6waves Lolapps King.com PeakGames Playdom Tetris Online GSN Happy Elements Playtika MindJolt Digital Chocolate DoubleDown Interactive KIXEYE

SOcIAL NETWORK GAMES

top content providers for Facebook


DAU 46,040,192 12,367,782 7,518,000 5,306,300 5,270,000 4,580,400 3,890,330 2,100,120 1,852,292 1,866,700 1,680,000 1,511,252 1,306,202 1,300,000 1,079,000
Source: Appdata 11/16/2011

$ $ 20% $ $ 20%
OffERS

AdVERTISIng

$ $ $ $ $ $ 60%
VIRTUAL GOOdS

Social network games rely heavily on their big spenders, or whales. Whales spend more than $25 per month, on average. While whales represent less than 15% of a games paying users, they account more than 50% of a typical games revenue. Moderate paying players spend $5 - $10 per month, represent 25%-40% of the payers, and generate about 25% of the revenue. Most payers spend only $1 - $5 a month and generate less than 15% of a games revenue, in aggregate.

Most paying users spend between $1 and $5

expected avg daily revenue per daily active user


1 5
Puzzle, Arcade, Caretaking, Simulations

Hidden Object, Adventure, Tournaments

10

RPG, Gambling, Poker


For illustration purposes only as revenue varies greatly.

Social Gaming Report 2012 CA S UA L G A M E S A S S O c I AT I O N

Revenue
Social network games are currently experiencing exponential growth that is expected to continue through 2014, helping to fuel audience and revenue growth in the online games segment.

U.S. Social Gamers Size U.S. Social Audience Gamers Audience Size Millions of Players Millions of Players 2010 57.4 2010 57.4 2011E 69.2 2011E 69.2 Facebook continue to 2012E 82.7 2012EWill 82.7 dominate social gaming? Through 2012e, the portion of social network game revenue associated with Facebook peaks as Facebook continues to push into new markets. Following 2012, Facebooks portion begins to decrease as niche social networks expand their games offerings and developers seek out less crowded markets.

What the Future Holds for Social Gaming

SOcIAL SOcIAL NETWORK GAMES GAMES

Worldwide (billion) 2010 2011E 2012E 2013E Worldwide (billion) 2010 Facebook Social Gaming Market (billion) 1.31 2011E 1.69 2012E 2.37 2013E 2.79 2013E Worldwide 2010 2011E 2012E Facebook Social Gaming 1.31 Non-Facebook Social Facebook Gaming Market 2.34 3.25 1.69 3.83 2.37 4.70 Social Market Gaming Market 1.31 1.69 Non-Facebook 2.34 3.25 excluding Asia 0.86 Social 1.14 Gaming 1.35 1.65 Non-Facebook Social Market Gaming Market 2.34 Asia 7.49 0.86 1.14 Total 3.65 excluding 4.94 excluding 6.20 Asia 0.86 1.35 1.14 1.65 1.35 1.65 Total 3.65 4.94 6.20 7.49 Total 3.65 4.94 6.20 7.49 FB/Non-FB Revenues, worldwide (billions) Facebook Social Gaming Facebook Social Market Gaming Market Non-Facebook Social Gaming Market Non-Facebook Social Gaming Market Facebook Social Non-Facebook Social Gaming Market Gaming Market excluding Asia excluding Asia 2010 2011E 2010
$1.31 $2.79 $1.69 $2.37 $3.83 $4.70 $3.25 $2.34

worldwide social network gaming market (billions) 2010 - 2014e

excluding Asia Emerging Markets Emerging markets are a key component of revenue growth in the global social network games market. Brazil and Russia are prime examples of current emerging markets for social network gaming. Use these three attributes to evaluate if a market is ready for social network games: 1.  High speed internet and smartphone penetration
$0.86 $1.65 $1.14 $1.35

$8.64 $7.49 $6.20 $4.94 $3.65

2010 2011e 2012e 2013e

social gaming markets (millions)

$1.84 2009 2010 2011e 2012e 2013e 2014e

Brazil
2010
$100 $171

Russia
2010
$56 $110

2.  Attractive social network audience 3.  Existing payment systems for processing online purchases

2012e

$136

2012e

$85

2011e

2011e

Social Gaming Report 2012 CA S UA L G A M E S A S S O c I AT I O N

CHART/GRAPHIC: Brazil Social Gaming 2010 - 2012E b CHART/GRAPHIC: Brazil Social Market Gaming Market 2010($, - 20

Key Terminology
FREEMIUM
Offering a game, product or service free of charge while charging a premium for advanced features, functionality, or related products and services.

VIRTUAL GOOdS
In-game items or game-related services such as power-ups, premium content, or a temporary subscription that enable or enhance gameplay.

COST PER AcQUISITIOn (CPA)/ CUSTOMER AcQUISITIOn COST


Cost of acquiring new customers. Calculated by by dividing the cost of a campaign by the number of new application installs attributable to that campaign.

MOnThLY AcTIVE USERS (MAU)


The number of unique users that have used an application at least once over the course of a month.

DAILY AcTIVE USERS (DAU)


The number of unique users that have used an application at least once over the course of a day.

LIfETIME VALUE (LTV)


Total amount that a player will spend with a particular game during his or her lifetime with the game.

ARPPU Average Revenue Per Paying User. ARPU Average Revenue Per User.

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