Just as social marketing has reshaped the communications industry, social gaming companies are transforming the video game industry. Leading this transformation is Zynga, maker of popular games such as FarmVille and CityVille.

Zynga’s model has key differences which separate it from traditional video game manufacturers. Zynga offers its games for free through Facebook but makes money by selling “virtual goods” that allow people to perform better in the game. According to The Wall Street Journal, 95% of users play for free while the remaining 5% spend from hundreds to thousands of dollars per month. Sales of virtual goods have given Zynga revenue of $600 million in 2010 including $91 million in profits.

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