Social Games
CASE: EC-39 DATE: 09/15/10 SOCIAL GAMES The social games market potential seems truly stunning. Assuming ½ of the Internet world may end up on Facebook and ½ of those Facebook users will try a social game at some point, we can say that ¼ of the online world is an approachable market. Yet only 1 to 3 percent of players of social games tend to be monetized, so we’re still at the tip of the iceberg in terms of revenue opportunity. —Tim Chang, principal Norwest Venture Partners In November 2009, 70 million people played a game called FarmVille on Facebook where players could pretend to be a virtual farmer, planting and harvesting fruits and vegetables and moving up to other levels by inviting their Facebook friends to be their neighbors. Similarly, 26 million active users per month played a game called Mafia Wars on Facebook where players could start a mafia family with friends, run multiple crime “businesses,” then fight to be the ruling family (Exhibit 1). These types of popular online games were called “social games,” games people played on social networks like Facebook, MySpace, Hi5, Orkut, and Bebo, with the key motive of socializing with friends and/or meeting new people, with Facebook as the dominant social network in the social gaming space. Social games were generally simple games that anyone could play. Unlike traditional video games, they were less about “killer graphics and quicksilver hand-eye coordination, and more about connecting with friends.”1 And because the mainstream was being lured into social gaming, it was becoming the fastest-growing game market, increasingly popular on social networking sites.
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