Report: Social Network Gameplay Increased 66% In 2010

According to a recent study by Total Consumer Spend 2010 and market research firm Newzoo, there has been a 66 percent increase in social network gameplay compared to only a 27 percent rise in MMO games.

According to a recent study by Total Consumer Spend 2010 and market research firm Newzoo, there has been a 66 percent increase in social network gameplay compared to only a 27 percent rise in MMO games. More after the jump.

In the United States, the console market controls 56 percent of the online gaming market, followed by casual gaming portals with 53 percent and social networks with 41 percent. Mobile devices and boxed PC games make up 36 percent and 38 percent of the market, respectively.

The MMO market in US is clocking over $2B in revenues and is comprised of roughly 47M MMO gamers. Of these, 17 percent only play in browsers and 12 percent play only on downloadable client. 71 percent, however, play on both browser and client. There are both free to play and pay to play MMO games, and 74 percent of players (~35M) only play the free ones compared to 17 percent which only pay ones that cost money – a sector dominated by World of Warcraft. It’s important to note that pay to play in this case means paying an upfront cost or subscription. The free to play market isn’t totally free, also, as it yields revenues in the forms of virtual goods purchases.

Currently the ratio of gamers to spenders is highest in consoles and lowest in social networks. This makes sense as all console games cost money and mostly all games on social networks like Facebook are free to play. The standard conversion of players that pay in social games is roughly 2 percent in US and higher in Asia. The statistics are similar in UK and Germany although UK has more mobile gamers than the US.

The trend is shifting towards social however as UK consumers spent 25 percent less on console games than last year. Analyst Michael Pachter believes that hand held devices, especially, have been contracting due to smartphone penetration.

“We believe the iPod Touch is cannibalizing dedicated game handheld hardware sales, and expect weakness in handhelds to persist until the 2011 introduction of the Nintendo 3DS,” suggests Pachter.

According to Interpret’s survey of 9,000 consumers in the US, the interest in mobile gaming is on the rise, causing existing handheld owners to leave their consoles gathering dust. 43.8 percent of the portable gaming market now uses a phone to play games – a rise of more than 53 percent over the course of the year. This stands in stark contrast to Nintendo DS or Sony PSP usage which has fallen by 13 percent.

The rise of smartphone gaming and social network adoption is altering the gaming industry for good and even paid mobile games seem to be shifting towards freemium models. EA’s and Gameloft’s drop in iPad games prices prior to Christmas has also diluted consumer expectation and we can expect indie’s to have a difficult time charging high pricing for games unless they are impeccable. This trend will cause brand advertisers to shift their focus from advertising on consoles and PC games towards social and mobile games – something already happening according to the report.

Peter Warman, Managing Director of Newzoo BV, commented, “Mobile and social gaming as well as massively multiplayer online games are enjoying mass-appeal and taking major chunks out of ‘total gamers’ wallet’.” He added that gamers these days are “spreading their budget across more platforms”.