Social gaming to be a $5B industry by 2015

Faith Merino · April 7, 2011 · Short URL:

Research firm Parks Associates predicts social gaming revenues will increase five-fold by 2015

Good news for all you social gaming companies out there (Zynga, are you paying attention?). Market research and consulting company Parks Associates is forecasting revenues for online social gaming to increase five-fold by 2015 to become a $5 billion industry. As of 2010, revenue generated through advertising and the sale of virtual goods pushed social gaming to a $1 billion industry, but Parks Associates sees significantly more growth in the coming years. 

Facebook alone has revolutionized the Web, but that's due in large part to how people are using the network. Social gaming apps are the most used apps on Facebook, with Zynga accounting for six of the top fifteen most popular apps. More than 250 million people today are playing social games on Facebook, like CityVille and FarmVille, and major brands like McDonalds and 7-Eleven are trying to get in on the action by creating social gaming promotions. 

The increasing revenue is due, in part, to better monetization, said Parks Associates Research Analyst  Pietro Macchiarella. These days, social gaming companies are driving up revenues by encouraging players to buy virtual items like tractors or seed to gain a competitive advantage or build up their status. 

“The most powerful asset of social game developers is the quantity of behavioral data that they can obtain from their games," Macchiarella said in a statement. "The abilities to measure the efficacy of different gameplay mechanisms, to tweak game design in near-real time, and to test new models are advantages that traditional gaming companies will never have. Zynga’s huge market share is the best proof of the competitive advantage made possible by properly leveraging consumer data."

Advertising is also playing a big role as brands and agencies work to leverage the unique user engagement seen in gamers to deliver relevant ads that enhance a user's gaming experience, rather than interrupting it. Kiip, for example, will soon launch a solution that will target that very engagement to strategically deliver ads. 

Interestingly, the World Bank is getting ready to release a report that finds that online gaming as a whole (not exclusively Facebook-centered social gaming) is now a $3 billion industry in Asia, where migrant workers are paid to play games all day and collect virtual goods to sell to westerners who don't want to play the games all day to get the items. The industry, says the World Bank, is providing a big boost to many Asian economies, but presents new problems as the work is unskilled and low-paying. 

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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users.  Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist.  The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel.  Zynga is headquartered at the Chip Factory in San Francisco.  For more information, please visit