Commentary

Social Gaming Revenues Will Top $1B in 2011, With More from Ads

  • by , Staff Writer, January 12, 2011

They may be casual, but social games are serious business, according to the latest report from eMarketer, which predicts total revenues for social gaming will increase 27.7% from $856 million in 2010 to $1.09 billion in 2011. In terms of players, the number of U.S. Internet users who play at least one game a month on a social network will increase from 53 million in 2010 to 62 million in 2011 -- roughly 27% of the total online audience.

As expected, revenue growth will be spread across the main social gaming revenue sources, with sales of "virtual goods" leading the way, at least in terms of total dollars; however, advertising is the fastest-growing category in percentage terms. Total revenues from virtual goods will increase 28% from $510 million to $653 million, while advertising revenues will grow 60% from $120 million in 2010 to $192 million in 2011. Lead generation offers will show more modest growth, increasing 10% from $225 million to $248 million over the same period.

Peering further into the future, eMarketer sees advertising revenues jumping another 41% to $271 million in 2012, as virtual goods sales grow 21.3% to $792 million. By this point advertising revenues will have eclipsed lead generation, which will grow just 4.8% to $260 million, for total social gaming revenues of over $1.3 billion in 2012.

Indeed, the eMarketer forecast paints a picture of business models in transition, with advertising playing an increasingly important role and lead generation's share diminishing. Advertising's share of total social gaming revenues is set to increase from 14.1% in 2010 to 20.5% in 2012, while virtual goods will hold steady at 60% of the market.

The social gaming virtual goods business has tapped into a small but avid group of consumers. Interestingly, while virtual goods make up the bulk of social gaming revenues, only 6% of U.S. social gamers actually spend money on them.

1 comment about "Social Gaming Revenues Will Top $1B in 2011, With More from Ads ".
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  1. Ted Simon from Ted Simon Consulting, January 23, 2011 at 1:19 p.m.

    Erik is spot on when he says this is "serious business." eMarketer's estimates are in line, maybe even a little low, with other research that indicates an explosion of growth in this emerging segment of games. From zero to over $1 Bil in 3-4 years...not bad.

    Erik is off just a tad when he says: "They may be casual, but..." This is a perception that has been driven by the vast array of similar casual games that have glutted the market, Facebook in particular.

    It's true that a very large chunk of games/players may be classified as "casual." However, this is not a market of one demo fits all. It's not just casual gamers playing on social networks; there's a growing number of core gamers who are looking for richer, deeper, more challenging game play than they'll find in a game ending in "ville," "town" or such. We know -- they are playing our games (full disclosure - I work for Kabam, maker of massively multiplayer social games).

    The social platforms are continuing to evolve, and major apps like games will continue to evolve and adapt to these new channels for delivering entertainment content. It's only going to get better and bigger - it's an exciting time, to be sure!

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About the Author

Erik Sass is editor of Publishers Daily. You can reach Erik at eriksass@gmail.com.