The market for digital goods and virtual currency on its site is already
a billion-dollar one, but up until now, Facebook is capturing only a
fraction of the business.
The reason: it gives developers great freedom
to monetize their applications using whatever business models and
third-party services they think work best.
But that will be coming to an end this July as the world's largest social network looks to further boost its revenue growth.
Social gaming exploded last year. More consumers are now playing these sorts of games online, and brands (ranging from SMEs and local businesses to blue-chips and multinationals) are beginning to invest in this space.
The sector is now worth close to £1bn, and is expected to show further growth in 2011.
This post, which coincides with the launch of our Social Gaming Smart Pack, contains a brief overview of social gaming, why it's important, and how it can be used for marketing.
Got points? Starting today, you can redeem them
for virtual items like cows in FarmVille or guns in Mafia Wars. In a
first-of-its kind deal, American Express has teamed with game-maker Zynga to
make its credit card rewards redeemable for virtual goods.
It’s the latest example of gamification – or the introduction of game
elements into non-game activities. There are reasons this commerce and gaming partnership works for AmEx and Zynga, but the deal could have implications for other
companies’ reward programs as well.
The internet has produced some fantastically profitable business models
over the past decade and a half. But out of all of them, which is the
Here's a candidate: class action lawsuits, which have been making their
way onto the consumer internet, where it seems they may become a dreaded
Thanks to the rise of massive social networks, namely Facebook, and a
multi-billion dollar virtual currency market, social gaming has become
one of the hottest spaces on the consumer internet.
But there's another reason social gaming is so hot: it is putting the
'casual' back into the concept of 'casual gaming'. Through social games
like Farmville and Mafia Wars, millions upon millions of non-gamers
have become gamers. In the process, social games are potentially
reshaping the gaming industry more broadly.
Google is the 800 pound gorilla of the internet, but despite its prominence, it doesn't have a large footprint in some of the internet's most lucrative emerging markets, such as online gaming. But it might be looking to change that.
On Saturday, TechCrunch's Michael Arrington reported that Google has "secretly invested" $100m to $200m in Zynga, the maker of some of the internet's most popular social games, including Farmville and Mafia Wars. According to Arrington, the investment is related to a new product Google is creating with Zynga's help: Google Games.
Social gaming is the driving force behind the billion-dollar virtual currency market. Popular social games on Facebook such as Farmville and Mafia Wars have turned startups like Zynga into IPO candidates, and have led to an ecosystem of companies that have come up with alternative ways for consumers to pay for digital goods online.
But for social game developers, building social games that have staying popular looks like it may be a challenge. As reported by Inside Social Games, the past two months have been particularly difficult for some of Facebook's most popular games. In April, over half of the top 25 games, as tracked by Inside Social
Games, lost users. And the drops intensified this past month.
Has virtual currency jumped the shark, or has it become such a mainstream phenomenon that the ability to free virtual currency might be enough of an incentive to get some individuals to eat their broccoli? Social gaming company Zynga and Green Giant, the vegetable company owned by General Mills, are going to find out.
The unlikely pair have teamed up to offer purchasers of Green Giant products free virtual currency that can be used within Zynga's most popular game -- Farmville.
Facebook has sat by and watched as prominent application developers
have made millions upon millions of dollars on its platform, primarily
through virtual currency. Not surprisingly, Facebook wants a piece of
the action and is moving to take a piece of the action.
But that may not be so easy if the results of early deal making efforts
are any indication. Application developer Zynga, which operates some of
the most popular social gaming apps on Facebook, including Farmville
and Mafia Wars, may leave Facebook and set up its own gaming social
network after negotiations with Facebook over the use of Facebook's
upcoming universal payments and credits system reportedly fell apart.
Meet the newest billion-dollar internet startup: Groupon. Russian firm Digital Sky Technologies, which has provided big funding for other big startups in the social space, namely Facebook and Zynga, has led a $135m investment in the young but profitable Chicago-based startup. The valuation: a cool $1.2bn valuation, which some observers believe is still "cheap."
Groupon is attracting a lot of attention these days, and for good reason. The U.S.-based group shopping service has fueled a worldwide gold rush in the group shopping space.