Facebook Gaming Market Favors Biggest Players: Report

Just when you thought the Facebook gaming sector couldn't get any more competitive, another report comes out saying things have tightened even further.

Just when you thought the Facebook gaming sector couldn’t get any more competitive, another report comes out saying things have tightened even further.

Lazard Capital Markets released a report based on meetings with a half-dozen privately held social and mobile gaming companies: CrowdStar, Digital Chocolate, Funzio, HeyZap, IGG, and Tapjoy.

The company’s conclusion on established players, such as Zynga and Electronic Arts is:

A toughening landscape bodes well (relatively) for established category leaders (such as Zynga and Electronic Arts) that have built large user bases and seem to enjoy network effects.

We acknowledge that toughening competition on Facebook could constrain margins and is generally negative for the space; however, we believe that rising user acquisition costs could be relatively positive for companies like Zynga and Electronic Arts that have already built large user bases on Facebook and disproportionately benefit from network effect and, therefore, may have an advantage over the newer companies in the...

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