Study: Facebook gaming declines in 2011, social gaming seeking new growth

facebook-logoWhile Facebook casual gaming has helped to triple the number of gamers in the US in the past three years, new research is saying that the social gaming boom is beginning to calm down, and perhaps seeking to mature. Market research firm IHS iSuppli states that “the honeymooon’s over,” chiefly due to rising barriers to entry, increasing competition and the fact that gaming has fallen in priority for social media users.

The IHS iSuppli report points out that 2011 marked a sharp drop in Facebook gaming, compared to the manic growth in the previous years. In 2010, 50 percent of Facebook’s monthly active users were gamers; gunning down virtual capos, and spamming friends’ feeds with brown cows. 2011 halved that number, with Facebook gamers dropping down to 25 percent. Meanwhile, Facebook user growth has continued to climb. The social media giant reached 800 million active users last month, and is projected to hit the 1 billion mark by late summer of 2012.

The study uses the social gaming leader to illustrate the point. Facebook’s gaming poster child Zynga, which makes up 12 percent of the networking site’s revenue, declined in monthly active users during the fourth quarter of 2011 during its IPO push. Despite remaining somewhat steady all through 2011, the company dropped to 225 million users in the fourth quarter—down from 266 million in September 2011.

“Facebook rocketed to prominence as gaming platform in 2009 and 2010,” said IHS. senior game analyst, Steve Bailey. However, with equal speed, zynga mau 2011the market then settled into a state of maturity in 2011, with conditions becoming markedly more challenging for game operators. While Facebook remains a worthwhile opportunity for companies able to meet these challenges, the tone of the market in 2012 will be somewhat muted compared to the optimistic outlook of the past few years.”

Bailey went on to point out that, one of the major components for this Facebook gaming challenge is finding and retaining users, and that means a rise in costs. With virality diminished, operators have had to shell out more money for advertising, and low costs were originally one of the more appealing aspects of social gaming for developers.

Along with advertising costs, the maturing of the marketplace also means a rise in production values. User engagement is key for developers; accessible genres are being shunned. Instead, Bailey states that there has been a steady trend towards strategy, action and traditional/casino games which require more skill and commitment from players.

And while Facebook’s active users cfarmvilleontinue to grow, the drop in gamers is a good reminder that Facebook is a non-specialist games platform. Gaming developers not only fend off direct gaming competition, they also need to vie for users’ attention with other “Facebook priorities.” Gamers would command more “voting power,” from specialist game platforms.

Perhaps its time to leave the Facebook nest? Developers like Kabam seem to be leading the exodus; sensing the impracticality of Facebook’s advertising costs, and refocusing its business with a partnership with Gamestop-owned gaming platform Kongregate, as well as investing in console-like 3D for its future games. Bailey believes that there is “copious opportunity in shifting Facebook gaming to complementary devices or markets,” though smartphones already have established competition.

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