The social network gaming craze!

A virtual farm turns new ground for game developers
Saturday, March 27, 2010
By John Gaudiosi

SAN FRANCISCO (Reuters) - A virtual farm attracting up to 83 million aspiring farmers monthly has video game developers scrambling to find ways to plough the booming popularity of games on social networks.

Sites like Facebook, which has an estimated 400 million users, and MySpace, with about 100 million users, are driving a social gaming craze that was in the spotlight at this month's 2010 Game Developers Conference (GDC).

Heiko Hubertz, CEO of browser-based games portal Bigpoint.com which is home to over 100 million gamers, said online game experiences were very solitary in the past.

"Now through social network gaming and browser-based games portals, gamers of all types can share their experiences and compete against each other in original experiences like 'Poisonville,' as well as licensed content like the upcoming 'Battlestar Galactica Online,'" said Hubertz.

Once-small companies like Zynga, Bigpoint, Playdom, and Playfish, which Electronic Arts bought for $400 million last year, are finding exponential growth by creating free-to-play casual games that encourage players to get their friends involved.

This viral approach to gaming is introducing a whole new audience to videogames.

"The 800 pound gorilla in social games is Zynga's 'FarmVille,' which has over 82 million people worldwide playing at least once a month and over 32 million people playing daily," said Justin Davis, founder and editor of SocialGameCentral.com.

"FarmVille," which has been available as an application on Facebook since June last year, involves managing a virtual farm by planting, growing and harvesting crops and raising livestock.

Zynga, which has created five of the 10 most popular social games, also attracts an audience of 30 million monthly and 9 million daily with "Cafe World," its second most popular game.

Davis said overall Zynga has over 230 million active players across multiple social networks.

Even MySpace, which announced a new MySpace Games experience at this month's conference aiming to encourage game makers to cater to its online audience, can attract over 10 million players with games like Playdom's "Mobsters" and Zynga's "Mafia Wars."

About one-third of MySpace users currently play games.

Strong Growth Forecast

Michael Pachter, videogame analyst for Wedbush Morgan Securities, said social gaming has grown from around $600 million in total revenue in 2008 to $1 billion in 2009 and expects social gaming to bring in around $1.6 billion this year.

"The growth rate should remain very high at around 40 percent each of the next three years, so my guess at 2011 is around $2.2 billion, 2012 at $3 billion 2013 at more than $4 billion," said Pachter.

While most of this gaming revenue is currently focused on the sale of virtual in-game items, called micro-transactions, Pachter forecasts there will be more advertising revenue and data mining in the future.

Game developers are introducing new technologies that could help grow social games even further.

Vivox, which provides voice chat services for massively multi-player online games like Nexon's "Combat Arms" and CCP Games' "EVE Online," is working with developer Hive7 to allow Facebook gamers to talk to one another while playing titles like the medieval strategy game "Knighthood."

"People will be able to play social games as if they were at the same table," said Rob Seaver, CEO of Vivox.

Traditional game companies like Activision Blizzard and Sony Computer Entertainment are connecting console games with social networks like FaceBook and micro-blogging site Twitter where users can send 140-character messages called "tweets."

Activision Blizzard's upcoming racing game, "Blur," will automatically write tweets for gamers to send to friends as they unlock achievements.

Sony announced at this month's conference that its virtual world, PlayStation Home, which has over 12 million users, will offer more interaction with FaceBook, including notifying players of turn-based games like chess when it's their next move.

"I love incorporating my latest achievements on Xbox 360 games like 'BioShock 2' and trophies on PlayStation 3 games like 'Uncharted 2' with my Facebook and Twitter," said Raychul Moore, host for videogame site Gamerlive.tv.

"It allows me to take my love of achievements one step further and share my accomplishments with a much wider group of friends."

It's that kind of connected experience that leads David Cole, president of DFC Intelligence, to forecast that the total free-to-play market worldwide excluding Asia will grow from $1 billion in 2009 to over $3 billion in 2013.

"The big challenge in 2010 and beyond will be in enhancing gameplay," said Cole.

(Editing by Belinda Goldsmith)