Social Gaming Thrives Beyond Facebook, U.S.

Hit titles like “FarmVille” and “Mafia Wars” have helped make Facebook the dominant player in social games in the U.S. But new research suggests the bulk of revenue in the emerging category worldwide is coming from social properties other than Facebook.

The study, commissioned by virtual goods platform Viximo and conducted by SuperData Research overall predicts the social gaming market globally will grow to $8.6 billion by 2014, with $5.6 billion of that total generated by non-Facebook social sites outside the U.S.

Facebook itself accounts for about one-third of worldwide social gaming traffic.

Asia remains the largest market for social games, with an expected $2 billion in total revenue this year, but South America and Europe are growing at a rapid clip. Among Western countries, Germany accounts for the most revenue, with over $173 million. That amount is projected to reach $250 million by 2014. Russia and Brazil have the largest social gaming audiences, at 35 million and 32.6 million, respectively.

The study found regionally-focused social networks like Hyves in the Netherlands and Tuenti in Spain provide additional distribution with strong monetization and lower customer acquisition costs. Other social networks target a distinct market within certain regions, such as students with StudiVZ (Germany) or people visiting dating sites such as Badoo in the U.K.

Other popular social networking sites include VKontakte in Russia, Yonja in Turkey and Orkut and in Latin America. Beyond regional players, the report also predicts newer Facebook rival Google+ to emerge as a strong contender in social games with wide distribution and higher potential for monetization. 

With 800 million users worldwide, why isn’t Facebook a bigger force in social games outside the U.S.?

The Viximo study argues Zynga’s role as the leading game developer on Facebook makes it harder for smaller firms with modest marketing budgets to break through. On Monday, Zynga launched “Mafia Wars 2," the sequel to its popular game in 16 languages including Italian, French and German.

Plus, Facebook’s requirement since July that developers use Facebook Credits--its virtual currency--in all apps and pay a 30% commission on purchases has limited pricing flexibility for game publishers, according to Viximo. It also pointed to efforts by Facebook to curb spam from apps or shut down some apps altogether has decreased the potential for viral growth on the site.

“No doubt Facebook will continue to provide a profitable, viable platform for dedicated developers. At the same time, a growing number of smaller, niche focused social networks are providing an alternative to the single platform launch,” stated the report.

The total sample size for the study included 774,158 transactions by 152,159 individuals for the six-months ending on June 1, 2011. SuperData used that data to calculate the average revenue per paying user by dividing revenues by total number of paying users.

Revenue reflects both direct payment (credit cards, mobile, prepaid game cards) and in-direct payment from players using opt-in marketing incentive offers. The figures mentioned do not include revenue generated from display advertising.

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