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Gaming Industry Shakeup – The Rise of Social Gaming

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.

Zynga also uses analytics to constantly improve its games. Based on data collected through Facebook, Zynga can regularly make adjustments to the game to increase the time people spend playing as well as increase sales of virtual goods.

Traditional video game makers are adjusting to this trend. Walt Disney and other major manufacturers have acquired social gaming start-ups. Electronic Arts, launched a free version of “The Sims” on Facebook; as of September 27th, the game climbed to be the second most popular game on the site. In addition, Electronic Arts has evolved its traditional console game FIFA soccer by allowing users to download players, coaches and training sessions for a fee. According to Bloomberg, sales of virtual goods for FIFA soccer were $100 million in 2010.
Wall Street analysts expect revenue for traditional gaming to grow 1% this year to $9.7 billion while sales of virtual goods are expected to rise 50% to $2.2 billion. Traditional gaming companies will need to stay aware of and adjust to social gaming to continue to grow and stay relevant.

If you are interested in social gaming as part of your brand’s marketing program, Domus has deep capabilities in HTML5 driven game development, mobile game development and Facebook/Twitter integration. Please contact us for more information about how we can be a social gaming a resource for you.

Ed Samide is a Senior Account Manager at Domus, Inc., a marketing communications agency based in Philadelphia. For more information, visit http://www.domusinc.com. For new business inquiries, please contact CEO and founder of Domus, Inc. Betty Tuppeny at betty.tuppeny@domusinc.com or 215-772-2805.

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