Analyst: Social Gaming Industry To Reach $5 Billion By 2015

Worldwide social gaming market revenues are expected to quintuple by 2015, reaching as much as $5 billion due mostly to advertising revenues and virtual goods sales, according to a new report from market research firm Parks Associates. In its Social Gaming: Market Updates report, the group estimates that the social gaming industry generated $1 billion in 2010. It says companies are improving user monetization opportunities through "new gameplay innovations" that incentivize players to purchase virtual items by promising status benefits, a competitive edge, or an improved gameplay experience. Parks Associates also says "advertising innovations" -- such as branded games, sponsored items, communities, and "advertainment" offers designed to enhance instead of interrupt gaming experiences -- are helping create new sources of revenues for social game publishers. The research firm points out that companies are adopting a metrics-based approach to game design, and claims "the most powerful asset of social game developers is the quantity of behavioral data that they can obtain from their games." "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," says Parks Associates research analyst Pietro Macchiarella. Macchiarella goes on to describe social gaming as the most visible category of online games. "Right now more than 250 million people play games like Zynga's CityVille and FarmVille on Facebook every month, and both game developers and marketers have taken notice," he adds.