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Once Again, Gaming Beats The Downturn

Once again, gaming is going "gangbusters" in a downturn, except this time, "it takes a lot less" than producing powerful (read: pricey) game consoles and big blockbusters to be a success, says BusinessWeek's Sarah Lacey. In fact, some of the most impressive growth in gaming right now comes from games that are inherently social. Take "Guitar Hero," "Rock Band" and the lineup of interactive titles from Nintendo's Wii: these are much less expensive to produce than blockbusers like "Grand Theft Auto."

Much less talked about is the surge in gaming on mobile phones and social media sites. Many of these games are simple and social in nature; most importantly, many are free. During recessions, people tend to look for such low-cost entertainment, Lacey says. These games also let social networking users share an activity rather than just photos and wall posts. According to some industry estimates, the number of people playing social games is expected to hit 250 million in 2009, up from 50 million in 2008.

Despite the low cost/low margin structure of social games, many producers are actually making money. Zynga founder Mark Pincus is one of them. His most popular game, Texas Hold 'Em, gets 2.5 milion players per day on Facebook. In April, Pincus' company passed widget maker Rock You to become the top application maker on Facebook, with 40 million active monthly users, or one-fifth of Facebook's monthly traffic. Moreover, Zynga is profitable, with annual sales of about $100 million, according to sources. The company earns some of its revenue selling ads, but most of it comes from users who pay $1 per hour to play premium games or buy virtual goods.

Read the whole story at BusinessWeek »

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