Announcing Inside Virtual Goods: The Future of Social Gaming 2010

2009 will be remembered as the year that casual gaming stormed social platforms and changed the way millions of people socialized with friends online. With an up-to-$400 million acquisition of Playfish by Electronic Arts, hundreds of millions of dollars in venture investments, and some of the highest engagement numbers that online entertainment has ever seen, social games are now impacting businesses across the media landscape. It’s become clear that there are substantial opportunities for social game developers with virtual goods revenue models, but the market is still evolving rapidly.

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That’s why I’m excited to announce today a new exclusive original research report with co-author Charles Hudson in our Inside Virtual Goods series that is exclusively focused on the future of the social gaming market, entitled Inside Virtual Goods: The Future of Social Gaming 2010. It will be released on Tuesday, January 26, but is available for discount pre-order now.

How big is the market, and where will social gaming go in 2010? How will existing players fare as Facebook shifts the social gaming landscape, and larger and more sophisticated players enter the market? Inside Virtual Goods: The Future of Social Gaming 2010 provides deeper insight into social game monetization, development, customer acquisition, and the key questions facing the space in 2010 than you’ll find anywhere else.

About the Report

Inside Virtual Goods: The Future of Social Gaming 2010 gives you an inside view of the future at this critical juncture in the intersection of social networking and online games.

We have compiled months of original research from dozens of top executives and entrepreneurs from all parts of the social gaming ecosystem to produce eye-opening source data and analysis that is not available anywhere else. At over 80 pages, Inside Virtual Goods: The Future of Social Gaming 2010 takes the closest look at the present state of social games and the future of what’s shaping up to be a very fundamentally strong and profitable industry.

What We Cover

  1. Emerging Social Game Development and Studio Models – There is an emerging consensus around how social game developers are choosing to organize themselves for game development. How do small, medium, and large developers organize their teams? What do development cycle times for original titles and “expansion packs” look like? What is the role of testing and metrics in the development process?
  2. Social Game Design and Mechanics – The emergence of a few key game genres with proven mechanics and monetization have spawned dozens of fast followers. Understand how publishers are continuing to innovate as we head into 2010.
  3. Monetization Data and Payment Trends – Now that developers have proven the virtual goods model, what are ARPUs really like for different game genres? What is the lifetime value of users, and how long do players stick around? We take an in depth look at monetization methods and rates, and shed light on where payments are headed in the coming quarters. One more note on monetization  – you may be wondering about everything you’ve heard about offers and alternative payments for virtual goods. We cover:
    • The offers ‘scandal’ and what will it mean going into 2010
    • Changes that advertisers and payments companies have – and haven’t – made
    • How both direct and alternate payment methods are most likely to grow or contract in the coming year.
  4. Customer Acquisition and Marketing Trends – As the social gaming landscape has evolved over the past two and a half years, so have the ways that developers acquire and retain new users. How have user acquisition costs changed, and what do Facebook’s changes spell for the future of the marketing funnel? We take an in depth look at data and trends.
  5. Facebook’s Platform Changes, Credits, and What’s In Store for the Future – Just when social game developers were settling in, Facebook announced major adjustments that will dramatically alter the way social games reach users through Facebook. Continued change is likely – what will it be, and how will it impact the industry? In addition, as Facebook rolls out its much-discussed Credits currency, how will monetization and the payments landscape be affected? Finally, will we see another dominant platform emerge? Our overview covers these developments, their impact on the industry, and what else is in store.

What you get

In addition to our deep dive into key aspects of the social gaming ecosystem, the report also offers extended coverage on:

  • A brief history on the evolution and growth of this space in the US, including a description of all key players and how they rose to the top.
  • Total social gaming market size estimates for 2010, including estimates on the “big three” developers.
  • Our take on the key issues facing the growth of social gaming, including our outlook and projections for 2010.

See the full table of contents below:

Table of Contents

Section I: Overview

1. The Evolution of Social Gaming

  • What is Social Gaming?
  • Why do Social Games Work?
  • A Brief History of the Major Eras in Social Gaming
    • Era I – The Virality Era
    • Era II – The Emergence of Paid Distribution
    • Era III – Rise of the Big 3 and the Network Model

2. Social Game Development and Design Processes

  • Studio Composition
    • Small Developers
    • Medium and Large Developers
  • Platform Services
  • Development Cycle Time
    • Expansion Packs
    • True Serial
  • Developing Franchise Titles
  • Role of Testing and Metrics
  • Multi-platform Development

3. Social Game Design and Game Mechanics

  • Emergence of Key Genres
  • Fast Followers vs Innovators
  • Templates / Engines
  • Intellectual Property
  • Barriers to Entry

4. Monetization

  1. How do social games monetize?
    • Virtual Goods
      1. Functional Virtual Goods
      2. Decorative Virtual Goods
      3. Consumables
    • Advertising
      1. Sponsorships
      2. White Label Games
      3. Branded Virtual Goods
  2. Monetization Rates
    • How do social game developers manage their businesses?
      1. Social RPGs
      2. Farm Games
      3. Pet Games
      4. Aquarium Games
      5. Poker Games
      6. Flirting Games
      7. Arcade Games
    • Monetization rates of key social game genres
    • How has monetization changed over the last year?
  3. Consumer Demographics
  4. Payments Breakdown
    • Understanding Offers and the Offer Controversy
      1. The Offer Controversy
      2. Offers in Social Games
      3. Increased Competition
    • Mobile and Alternative Direct Payments
      1. Large Payment Platforms
      2. Direct Payments vs Offers
      3. Direct Payments Breakdown in Social Games
    • Direct Payments
      1. Mobile Payments
      2. Pre-Paid Cards
      3. New Payment Providers
  5. Lifetime Value of Social Game Players (LTV) – What do we know?
    • How long do players stick around?
    • When in their lifecycle do users monetize best?
    • Seasonality and monetization lifecycles in social games
    • Banner advertising’s role

5. Customer Acquisition and Marketing

  • The Rise, Fall, and Re-rise of Viral Acquisition
  • Cross Promotion
  • Paid Acquisition
    • Facebook Ads
    • Third-party Facebook Platform Ad Networks
  • Network Strategy and Economies of Scale

6. 2010 Market Size and Top Developers Revenue Estimates

  • 2010 Social Gaming Market Size
  • Top Developer Revenue Estimates
    • Zynga
    • Playfish
    • Playdom
    • Crowdstar

Section II: The Future

1. Facebook Platform Changes and the Relationship Between Facebook and Application Developers

  • Impact of Platform Changes
  • Developers and Advertising Spend

2. What does the emergence of the big 3 mean for small and medium sized developers?

  • Marketing and Customer Acquisition
  • The CrowdStar Example
  • Can an independent developer dominate a category?

3. Facebook Credits, Offers, and the Changing Monetization Landscape

  • Impact of Facebook Credits
  • Offers and Performance Advertising
  • Role of Alternative Payment Systems

4. Off-Network Games with Facebook Connect

  • Intersection of Social and Mobile
  • Open Internet – and Facebook Connect

5. Will Another Platform Other Than Facebook Emerge?

  • MySpace
  • Twitter
  • Global Social Networks
  • Global Portals
  • Search Engine Application Platforms

6. Investment Landscape

  • Venture Capital
  • M&A and IPO Landscape

7. Competitive Response in the Broader Media and Games Industry

  • Casual game developers
  • Console Games Companies
  • Casual MMOs and Virtual Worlds
  • Diversified Media Companies

More Data, More Actionable Insights

In 2009, social games began to show what kind of value can be created on top of social networks. 2010 will be an even more important year.

Social gaming, powered by virtual goods, is this year’s industry to watch. If you’re involved, or are considering jumping in, Inside Virtual Goods will be one of your most important tools.

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