Facebook game boom is over, analyst claims

Market analysis group IHS released a report today claiming that the Facebook game boom has ended.

“Facebook rocketed to prominence as a gaming platform in 2009 and 2010,” said Steve Bailey, senior analyst for games at IHS.

“However, with equal speed, the market then settled into a state of maturity in 2011, with conditions becoming markedly more challenging for game operators.

"While Facebook remains a worthwhile opportunity for companies able to meet these challenges, the tone of the market in 2012 will be somewhat muted compared to the optimistic outlook of the past few years.”

According to the report, though Facebook has continued to grow, the number of monthly active users on the social network has not changed appreciably over the past year.

In 2010, roughly half of all Facebook users were active gamers.

By December 2011 that figure had dropped to twenty-five per cent.

This means game companies must invest more and more capital to compete for the attention of a limited number of users.

Zynga, for example, has lost an average of almost five and a half million MAUs a month over the past year, with a particularly steep decline between the third and fourth quarters.

The rising cost of competition means lower returns for each user, creating additional barriers of entry to new companies seeking to launch products on Facebook.

Gamers are also seeking deeper, more challenging games, as shown by the increasing number of strategy titles available on Facebook.

The report concludes that Facebook is now part of a cross-platform environment due to the rising numbers of smartphone users, and will remain a major player.

Though Facebook is addressing many of these problems, IHS does not believe it likely they will be fully dispelled by the end of 2012.