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SAMPLE: Social
Gaming

Smart Pack

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SAMPLE:
Social Gaming

Published January 2011 Econsultancy London Econsultancy New York

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Contents

1. Introduction ..................................................................... 1
1.1. About Econsultancy ..................................................................... 1

2. Executive Summary ......................................................... 2

3. What... is social gaming? ................................................. 3
4. Why… is social gaming important? ................................. 4
5. The state of social gaming [Infographic] ......................... 5
6. Market trends .................................................................. 6
6.1. Market value ................................................................................ 6
6.2. Marketplace developments ......................................................... 6
6.3. Social networking sites attract third-party developers .............. 7
6.4. The popularity of casual games explodes ................................... 7
6.5. Zynga dominates the casual gaming market .............................. 8
6.6. Lead generation scams erode consumer trust ............................ 8
6.7. Browser games give developers the upper hand ...................... 10
6.8. Mobile and tablets present new opportunities for gaming ...... 10
6.9. Lack of skills and talent hold back the industry ........................ 11

7. Statistics ......................................................................... 13
7.1. Econsultancy / Toluna social gaming survey ............................ 13
7.2. Third-party statistics and research ............................................18

8. Who... should I know about? ......................................... 19

8.1. Social games developers .............................................................19
8.2. Virtual world communities ........................................................ 21
8.3. Social gaming analytics companies ........................................... 21
8.3.1. Kontagent ............................................................................... 21
8.3.2. Vertica .................................................................................... 22
8.3.3. Mixpanel ................................................................................ 22
8.4. Payment services / Monetisation ............................................. 23
8.4.1. Virtual currency offer providers ............................................ 23
8.4.2. Payment service providers ..................................................... 24

Social Gaming Smart Pack

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9. Measurement and metrics ............................................. 25
10. Case studies .................................................................... 28
10.1. 7- Eleven .................................................................................... 28
10.2. McDonald‟s ................................................................................ 29
10.3. Green Giant ............................................................................... 30
10.4. Disney / TRON: Legacy .............................................................. 31
10.5. Charles Chocolates .................................................................... 32
10.6. PopSugar.................................................................................... 33
10.7. Mertado ..................................................................................... 34
10.8. ProFlowers ................................................................................. 35

11. Appendix ........................................................................ 36

11.1. List of virtual currency / payment providers ........................... 36

12. Recommended reading .................................................. 37

12.1. Econsultancy blog posts ............................................................ 38

Social Gaming Smart Pack

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1. Introduction
This first Econsultancy report about social gaming is part of a series of „Smart Pack‟ reports
Econsultancy is developing which are designed to explore emerging trends and new areas relating
to online marketing.
These Smart Packs are being created specifically to provide cutting-edge insight into niche, front-
line areas of digital marketing. The reports cover a range of topics, such as social gaming,
location-based marketing and mobile advertising.

This report includes sections on:

 Market trends and developments.

 Econsultancy / Toluna consumer research on social gaming.
 Third-party statistics.
 An overview of the key players in the industry.
 Summary of key metrics required to measure success.
 Case studies of companies using social gaming for marketing.
We welcome feedback, and if you have any questions about the report, please email
Econsultancy‟s Research Manager, Aliya Zaidi (aliya.zaidi@econsultancy.com).

1.1. About Econsultancy

Econsultancy is a digital publishing and training group used by more than 200,000 internet
professionals every month.

The company publishes practical and time-saving research to help marketers make better
decisions about the digital environment, build business cases, find the best suppliers, look smart
in meetings and accelerate their careers.

Econsultancy has offices in New York and London and hosts more than 100 events every year in
the US and UK. Many of the world's most famous brands use Econsultancy to educate and
train their staff.

Some of Econsultancy‟s members include: Google, Yahoo, Dell, BBC, BT, Shell, Vodafone, Virgin
Atlantic, Barclays, Deloitte, T-Mobile and Estée Lauder.

Join Econsultancy today to learn what‟s happening in digital marketing – and what works.

Call us to find out more on +44 (0)20 7269 1450 (London) or +1 212 699 3626 (New York). You
can also contact us online.

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2. Executive Summary
The growth of social media has revolutionised the way the world communicates, disrupted
industries and created new markets. Gaming is one of those sectors that has emerged from the
social media landscape and is now showing rapid growth, thanks to the explosion of social
networking technologies.

Social games are web-based games that can be played with other people online and include
interactive elements or content that can be shared.

The social gaming space is exciting because even in its relative infancy, it has shown itself to be
highly profitable and to deliver strong return on investment, largely thanks to the sale of virtual
goods and currency.

Set to become a billion dollar industry, the sector is attracting strong marketing investment, from
small and medium-sized companies through to blue chips and large multinationals. Just some of
the companies who have already invested in this emerging new area include McDonald‟s, 7-
Eleven, Volvo, MTV and Disney.

Historically, it has been valuable to invest in new emerging areas where users are spending a large
proportion of their time online. As part of this new wave of marketing, Econsultancy is developing
a series of Smart Packs designed to enlighten marketers about the latest trends and exciting new
developments across the digital marketing landscape.

This is the first Smart Pack, including the findings of a consumer survey conducted by
Econsultancy in association with Toluna1. The research is based on an online survey of 2,000
consumers carried out in December 2010.

Key findings of the research include:

 Overall, a fifth of respondents to the Econsultancy / Toluna consumer survey (19%) said
they played social games online.
 Slightly more females than males are playing social games (20% compared to 18% for
males).

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1 Econsultancy uses the Toluna QuickSurveys tool for its consumer research. www.tolunapro.com

SAMPLE: Social Gaming Smart Pack Page 2

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3. What... is social gaming?
Social games are web-based games that can be played with other people and include interactive
elements or content that can be shared online.

There are three main types of social games:

 Social games on social networks. These take place within the environment of a social
network, such as Facebook or Hi5 and incorporate the functionality of the underlying
platform into the game. For example, the game may allow players to play and interact with
Facebook friends and share content or report achievements on their Wall.
 Game portals. Game portals are specialist distribution channels for social games. Users
play or pay for games on the specialist site.
 In-browser social games. These are played on the internet and can be created and run
using standard web technologies or browser plug-ins.

According to Social Times2, social games have particular attributes that make them different
from other types of games:

 Turn-based and multi-player. Social games need to be played with other people in
order to allow for a social experience. It is worth noting that many online games that are
traditionally played alone are also now incorporating social elements. For example, Apple‟s
Game Centre allows iPhone users to share scores of individually played games with users
online, as well as with family and friends.
 Awareness of others’ actions.
 Casual gaming.

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2 http://www.socialtimes.com/2008/07/social-games/

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4. Why… is social gaming important?
Social gaming is rapidly becoming a billion dollar industry. Historically, it has been valuable to
invest in new emerging areas where users are spending a large proportion of their time online.
Experts predict that social gaming will help to shape the next wave of marketing.

As social gaming is very much in its infancy, it can be difficult to justify investing in the channel.
However, it is worth noting that many companies have already invested in social games, either
through branded content, virtual goods, sponsorship or advertising. Some have reaped
tremendous benefits from the channel.

There are many brands that are already using social gaming marketing and not just those that are
marketing at teens or niche audiences.

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5. Market trends
5.1. Marketplace developments
 Disney announced it acquired Playdom in July 2010 for an estimated $763 million.
 In June 2010, Playdom bought social gaming start-up, Hive7. The start-up was founded in
2005 and develops social games for Facebook and MySpace.

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5.2. Social networking sites attract third-party developers
Facebook and the growth of social networks are the catalyst for the explosion in popularity of
social gaming. Facebook has approximately 500 million daily active users, providing an ideal
distribution network for online games developers. Distribution through friend networks can
result in the popularity of games increasing exponentially in a very short space of time.

5.3. The popularity of casual games explodes

As discussed above, it is casual gamers who typically play social games, rather than hard-core,
traditional gamers. Social games allow companies to connect with users who don‟t necessarily
think of themselves as gamers.

The most popular games tap into real-world passions and relate to the hobbies and interests of
the user. Because social networks have facilitated playing with family and friends, gaming has
become far more mainstream. To introduce non-gamers into social gaming, it is important to
reach them through existing passion points. For example, sport (or farming in the case of
FarmVille) can create meaningful social experiences online.

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6. Statistics
6.1. Econsultancy / Toluna social gaming survey
Econsultancy conducted a consumer survey (in association with Toluna), where 2,000
respondents were polled about social gaming activity. The key findings of the research are
highlighted below.
 Overall, a fifth of respondents (19%) said they played social games online (Figure 1).
 Over a quarter of 16-30-year-olds (28%) said they played social games online, compared to
only 8% of those aged 55 or older. Some 16% of those aged between 35 and 54 play social
games online (Figure 2).

Figure 1: Do you play social games online?

Respondents: 1999

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7. Who... should I know about?
7.1. Social games developers
The three biggest social games developers in the market are Zynga, Playfish and Playdom. The
table below details the key players in the market.

Social games developers

Name Description Key game titles

Zynga has more than 700 employees worldwide

and generated £200 million in revenue in 2009.
It has three times as many daily active users
(DAU) as its nearest competitors.

Zynga’s most popular titles include FarmVille,

Mafia Wars and CaféWorld. Mafia Wars was
one of the first social games to gain mainstream
popularity and this was followed by FarmVille.
The farming game has gained widespread
popularity and, at its peak, 70 million active
users a month.

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7.2. Virtual world communities
A sub-category of social games include those that take place within a virtual world environment,
or with 3D avatars. There are many virtual world communities and these can be targeted towards
specific demographics and age groups. The chart below shows some of the most significant
players in the market, listed by the age profile of the typical user.

Adapted using data from http://www.virtualworldsreview.com/ 3

7.3. Social gaming analytics companies

There are a number of specialised analytics providers that provide real-time data to game
publishers. Real-time data is becoming increasingly important and particularly for gaming
websites. The industry leader, Zynga, uses many different metrics in real-time, such as where
users come from, when they leave and what they do on-site.

Analytics and real-time data are important as they allow game publishers to improve the overall
gaming experience and therefore enhance the virality of the game.

7.4. Payment services / Monetisation

There are various ways to monetise social games. Social media has long had a difficult
relationship with demonstrating tangible ROI, but unlike other areas of social, gaming provides a
tangible route to profitability through sales of virtual goods, virtual currency or micropayment
solutions.

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3The list of virtual worlds communities by category/ age is available at

http://www.virtualworldsreview.com/

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8. Measurement and metrics
There are various metrics used within social gaming to measure success. Social gaming has
measurement tools built in, making it easy to benchmark different games with like for like
metrics.

Wavedash, a gaming community, has created a glossary of gaming terms4. The list of gaming
terms below has been adapted using this blog post in part.

ARPU
ARPU is the average revenue per user and is the total revenue generated by the gaming company,
divided by the total number of members of the community.

Conversion to pay
Churn
Cohort

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4 http://www.wavedash.net/2010/04/the-secret-glossary-of-social-games-analytics/

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9. Case studies
9.1. 7- Eleven
7-Eleven partnered with Zynga in May 2010 to offer branded items on FarmVille, Mafia Wars and
YoVille. The campaign allowed consumers to buy specially-marked products in-store with
promotional codes that could be exchanged for in-game items.

The code could be redeemed at buyearnplay.com. In addition, consumers could also earn “über
gifts”, by redeeming six to eight codes and completing a “Zynga task”.

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10. Recommended reading
10.1. Econsultancy blog posts

1. Q&A: Simon Guild of Bigpoint on the social gaming revolution

http://econsultancy.com/blog/6868-q-a-simon-guild-of-bigpoint-on-the-social-gaming-
revolution

2. Q&A: Charles Hudson on social gaming

http://econsultancy.com/blog/6757-charles-hudson-on-social-gaming

3. Will American Express, Zynga deal be a virtual rewards game-changer?

http://econsultancy.com/blog/6914-virtual-goods-vs-airline-miles-whats-more-rewarding-
for-consumers

4. Disney bets big on social gaming

http://econsultancy.com/blog/6324-disney-bets-big-on-social-gaming

5. Social gaming: it‟s tough staying popular

http://econsultancy.com/blog/6071-social-gaming-it-s-tough-staying-popular

6. In-game advertising: are we being played?

http://econsultancy.com/blog/6420-in-game-advertising-are-we-being-played

7. Appsavvy: Virtual goods increase real world purchase intent

http://econsultancy.com/blog/6278-virtual-goods-appsavvy

8. Facebook to Zynga: we‟re not in FarmVille any more

http://econsultancy.com/uk/blog/5877-facebook-to-zynga-we-re-not-in-farmville-any-more

9. Zynga brings virtual goods to physical retailers

http://econsultancy.com/blog/5658-zynga-brings-virtual-goods-to-physical-retailers

10. Video views for virtual currency: are video offers really a good bet for brands?
http://econsultancy.com/blog/5207-video-views-for-virtual-currency-are-video-offers-really-
a-good-bet-for-brands

11. Facebook changes put end users above app developers

http://econsultancy.com/blog/4880-facebook-changes-put-end-users-above-app-developers

12. Zynga: Powering Facebook ads through virtual goods

http://econsultancy.com/blog/4692-zynga-powering-facebook-ads-through-virtual-goods

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