Social games: New specialists profit while casual old guard looks on

London, 20th July 2010 While the real economy is still struggling to recover, the virtual economy is booming, with consumer spending on microtransactions in games played on social networks set to rise to more than $1 billion in 2012, according to latest research from Screen Digest. Almost non-existent three years ago, the emergence of social games has resulted in many new gamers - but it has also hit growth in the traditional portal-led casual games markets due to the overlap in consumers.

“There is no doubt that the traditional PC casual markets of‘try and buy’ and subscriptions have come under pressure from the success of games on social networks.” said Piers Harding-Rolls, Head of Games for Screen Digest.“As users of social networks have increased and the volume of social games content has expanded rapidly, casual games portals have had to work harder to compete.”

The worldwide market for games played on social networks reached a substantial $639m in 2009. Screen Digest launches its coverage of this sector with a global report tracking performance in 2008 and 2009, with forecasts through to 2014. The report focuses on the performance of three separate business models: sale of virtual currency and goods through microtransactions to gamers, lead generation or 'offer' revenues to operators, and advertising revenues to operators. Microtransactions will represent the largest revenue opportunity in the social gaming market through to 2014, overshadowing the other segments of lead generation and advertising.

Social game specialists

Screen Digest has identified the top five social games operators globally in 2009 as Zynga, Playfish, Playdom, Five Minutes and SlashKey. These companies held a combined market share of 56 per cent in 2009, up from 38 per cent in 2008. Zynga is by far the biggest social games operator, ending 2009 with 242 million Monthly Active Users (MAUs) across its network of games. Its nearest competitor at the end of 2009 in terms of users was Five Minutes with 73 million MAUs, while its closest competitor in consumer spending/revenue terms was Playfish.

Global market stretches beyond Facebook

The social games market remains dominated by the distribution power and massive userbase of Facebook, but this market is by no means a one network opportunity. Screen Digest tracks millions of users on other social networks that are playing games, especially in markets where Facebook is not highly penetrated such as China, Russia and Japan. Worldwide MAUs of games reached over 500m at the end of 2009, from a much smaller base of 60m in 2008. 106m of these users were in China alone.

Growth will moderate but continue

Following this explosive emergence of the sector, Screen Digest now expects growth to slow significantly from 2010 onwards. Key to ongoing growth efforts will be a focus on increasing the conversion of free gamers to customers; growing spend from existing customers; and increased reach as social networks beyond Facebook expand their games offer. Screen Digest expects the worldwide market to grow to $826m in 2010 as game operators utilise these evolving strategies to grow their revenues.

“Improving game design and cultivating a better understanding of conversion trigger points will enable social game operators to gradually increase the rate at which they convert free gamers to paying customers and also how much these customers spend” said Harding-Rolls.“This trend has already occurred in other microtransactional games markets– massively multiplayer online games is the key example - and Screen Digest expects the social games sector to follow this pattern providing ongoing market growth even across well penetrated markets and networks.”


For more information please contact:

Nina Croad T: +44 (0) 7889 491259

Lucy Green T: +44 (0) 7817 698366

Screen Digest: Fay Hamilton, PR and Promotions Manager

T: +44 (0) 20 7424 2847

About this research

The information in this report is taken from the Screen Digest report Social Network Games: Casual Games' New Growth Engine published in July 2010. The global report tracks performance in 2008 and 2009, with forecasts through to 2014 and includes data on North America, Latin America, Europe, Middle-East and Africa, and Asia Pacific and highlights the growing importance of social networks as emerging distribution platforms of entertainment content, with games leading the way. The data and forecasts concentrate on the performance of three separate business models: sale of virtual currency and goods through microtransactions to gamers, lead generation revenues to operators and advertising revenue to operators. This report is a prelude to the inclusion of social games forecasts within the Games Intelligence service, tracking performance in 32 territories worldwide.

About Screen Digest

Screen Digest is the pre-eminent firm of industry analysts covering global media markets. Headquartered in London, with offices in the US and Australia, we employ a team of 50 specialist analysts covering film, television, broadband media, mobile media, cinema, home entertainment, gaming and advertising. Our online services and reports provide the information and analysis that hundreds of media companies worldwide base their decisions on. To find out more, contact Screen Digest Tel: +44 (0) 20 7424 2820.

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