Announcing Inside Virtual Goods: The Future of Social Gaming 2011

2010 will be remembered as the year that games on social networks became a billion dollar business and transformed the way millions more people socialized with friends online. With an up-to-$750 million acquisition of Playdom by Disney, Playfish’s integration across Electronic Arts, the continued growth of Zynga, the rise of CrowdStar and Kabam, and continued venture investments, social games are impacting businesses across the media landscape. Despite the challenges facing the market, it’s become clear that there are still substantial opportunities for social game developers with virtual goods revenue models, but the market is still evolving rapidly.

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Inside Network is proud to announce a new original research report by Justin Smith and Charles Hudson that is exclusively focused on the future of the social gaming market, entitled Inside Virtual Goods: The Future of Social Gaming 2011. This is Inside Network’s second annual edition of the Future of Social Gaming report. It will be released on November 16, but is available for discount pre-order now.

How big is the market, and where will social gaming go in 2011? How will existing players fare as Facebook shifts the social gaming landscape through the rollout of Facebook Credits and continued changes to the platform? Inside Virtual Goods: The Future of Social Gaming 2011 provides deeper insight into social game monetization, development, customer acquisition, and the key questions facing the space in 2011 than you’ll find anywhere else.

About the Report

Inside Virtual Goods: The Future of Social Gaming 2011 gives you an inside view of the future at this critical juncture in the intersection of social networking and online games.

We have compiled months of original research from dozens of top executives and entrepreneurs from all parts of the social gaming ecosystem to produce eye-opening source data and analysis that is not available anywhere else. Inside Virtual Goods: The Future of Social Gaming 2010 takes the closest look at the present state of social games and the future of this strong but still rapidly changing industry.

What We Cover

  1. Social Game Development and Studio Models – There is an emerging consensus around how social game developers are choosing to organize themselves for game development. How do small, medium, and large developers organize their teams? What do development cycle times for original titles and “expansion packs” look like? What is the role of testing and metrics in the development process?
  2. Social Game Design and Mechanics – The emergence of a few key game genres with proven mechanics and monetization have spawned dozens of fast followers. Understand how publishers are continuing to innovate as we head into 2011.
  3. Monetization Data and Payment Trends – Now that developers have proven the virtual goods model, what are ARPUs, ARPPUs, and LTVs really like for different game genres? What is the lifetime value of users, and how long do players stick around? We take an in depth look at monetization methods and rates, and shed light on where payments are headed in the coming quarters. One more note on monetization – you may be wondering about everything you’ve heard about the rollout of Facebook Credits. We cover:
    • Both the goals and benefits, and challenges and costs, of Facebook Credits for developers
    • Changes that developers have – and haven’t – made
    • How the rollout of Facebook Credits will affect the payments ecosystem (looking at both direct and alternativee payment methods globally)
  4. Customer Acquisition and Marketing Trends – As the social gaming landscape has evolved over the past three and a half years, so have the ways that developers acquire and retain new users. How have user acquisition costs changed, and what do Facebook’s changes spell for the future of the marketing funnel? We take an in depth look at data and trends.
  5. Facebook’s Platform Changes, Credits, and What’s In Store for the Future – Facebook has continued to change Platform communication channels and functionality over the last year, significantly altering the way social games reach users through Facebook. Continued change is likely – what will it be, and how will it impact the industry? In addition, as Facebook rolls out its much-discussed Credits currency, how will monetization and the payments landscape be affected? Finally, will we see another dominant platform emerge? Our overview covers these developments, their impact on the industry, and what else is in store.

What you get

In addition to our deep dive into key aspects of the social gaming ecosystem, the report also offers extended coverage on:

  • A brief history on the evolution and growth of this space in the US, including a description of all key players and how they rose to the top.
  • Total social gaming market size estimates for 2011, including estimates on the “big four” developers.
  • Our take on the key issues facing the growth of social gaming, including our outlook and projections for 2011.

See the full table of contents below:

Table of Contents

Section I – Overview

1. The Evolution of Social Gaming

  • What is Social Gaming?
  • Social Games as a Unique Games Genre
  • A Brief History of the Major Eras in Social Gaming
    • Era I – The Virality Era
    • Era II – The Emergence of Paid Distribution
    • Era III – The Rise of the Big 4 and the Network Model
  • Key Changes in the Social Gaming Landscape in 2010 as 2011 Begins

2. Social Game Development and Design Processes

  • Studio Composition
  • Small and Medium Developers
  • Large Developers
  • Platform Services
  • Development Cycle Time
  • Developing Franchise Titles
    • Expansion Packs
    • True Serial
  • Role of Testing and Metrics
  • Multi-platform Development

3. Social Game Design and Design Mechanics

  • Resource Management and Simulation
  • Gambling
  • Caretaking
  • Casual and Arcade
  • Emergence of New Popular Genres
    • “Hardcore” Strategy Games on Facebook
    • Continued Rise of Sims and Appointment Games
    • Branded Games
    • Social and Mobile: Is It Going to Work This Time?
  • Category Coverage for Major Facebook Developers
  • Intellectual Property
    • Fast Followers vs Innovators
    • Building Games with Third Party IP
  • The Importance of Templates and Engines

4. Monetization

  • How do social games monetize?
    • Virtual Goods
      • Functional Virtual Goods
      • Decorative Virtual Goods
      • Consumables
    • Advertising
      • Sponsorships
      • White Label Games
      • Branded Virtual Goods
  • Monetization Rates
    • Defining terms: Understanding the user acquisition and conversion funnel
      • Registered Users
      • Active Users
      • Average Revenue Per User (ARPU)
      • Average Revenue Per Paying User (ARPPU)
      • Lifetime Value (LTV)
    • How do social game developers manage their businesses?
    • Monetization Rates of Key Social Game Genres
      • Role Playing Games and “Hardcore” Mini-MMOs
      • Simulation and City-Building Games
      • Pet Games
      • Poker Games
      • Arcade Games
      • Flirting Games
    • How has monetization changed over the last year?
    • Consumer Demographics
    • Whales in Social Games
  • Impact of Facebook Credits
    • Goals and Benefits
      • More Paying Players
      • Less Friction
      • Higher Trust
    • Challenges and Costs
      • Loss of Control
      • Facebook’s Fee
      • Breakage
    • Developer Sentiment
      • Large Developers vs Small Developers
      • Different Implementations
    • Impact on Payments Ecosystem
      • Offer Providers
      • Direct Payment Providers
  • Payment Methods Breakdown
    • Understanding Offers and the Offer Controversy
      • The Offers Controversy
      • Offers in Social Games
      • Increased Competition
    • Direct Payments
      • Direct Payment Methods Breakdown in Social Games
      • Direct Payments vs Offers
    • Mobile and Alternative Direct Payments
      • Mobile Payments
      • Pre-Paid Cards
      • New Payment Providers
  • Lifetime Value of Social Games Players (LTV) – What do we know?
    • How long do players stick around?
    • When in their lifecycle do users monetize best?
    • Seasonality and monetization lifecycles in social games
    • Banner advertising’s role

5. Customer Acquisition and Marketing: The New Distribution Landscape

  • The Rise, Fall, and Re-rise of Viral Acquisition
  • Impact of Facebook Platform Changes on Viral Distribution
    • News Feed
    • Invitations
    • Notifications
  • Cross Promotion
    • Large Developers vs Small Developers
    • Publishers and New Third Party Cross Promotion Networks
  • Paid Acquisition
    • Facebook Ads
    • Third Party Facebook Platform Ad Networks
  • A Look at Growth and Decay of Games Launched in 2010
  • Off-Facebook Promotion
  • Network Strategy and Economies of Scale

6. The Big 4: Head Count, Strategy, Challenges, and Revenue Estimates

  • Zynga
  • Playfish
  • Playdom
  • CrowdStar

7. 2011 Market Size Estimates

  • 2011 Social Gaming Market Size

Section II – The Future

1. Facebook Platform Changes and the Relationship Between Facebook and Application Developers

  • Impact of Platform Changes
  • Facebook Platform Policy and the Lolapps Example
  • Developers and Advertising Spend

2. The Future of Facebook Credits and the Changing Monetization Landscape

  • Impact of Facebook Credits
    • Rollout Timeline
    • Off-Facebook Credits Availability
  • Offers and Performance Advertising
  • Role of Alternative Payment Systems

3. Key Customer Acquisition Questions for Small and Medium Sized Developers

  • Impact of the Rise of the Big 4
    • Growing Value of Cross Promotion
    • Marketing and Customer Acquisition
  • How can small/medium developers succeed in a “cold start” situation?
    • Reasonable Goals
    • Examining Success Stories from 2010
  • Can an independent developer dominate a category?

4. Off-Network Games with Facebook Connect

  • Intersection of Social and Mobile
  • Open Internet and Facebook Connect

5. Will Another Platform Other Than Facebook Emerge?

  • Google
  • MySpace
  • Twitter
  • International Social Networks (China, Japan, Russia)
  • Casual/MMO Portals
  • Global Portals: Yahoo, MSN, and Others
  • Mobile Social Networking Platforms

6. Competitive Response in the Broader Media and Games Industry

  • Casual Game Developers
  • Console Games Companies
  • Casual MMOs and Virtual Worlds
  • Media Companies

7. Investment Landscape

  • Venture Capital
  • M&A and IPO Landscape

Appendix – Related Companies

More Data, More Actionable Insights

In 2010, social games began to show what kind of value can be created on top of social networks. 2011 will be an even more important year.

Social gaming, powered by virtual goods, is this year’s industry to watch. If you’re involved, or are considering jumping in, Inside Virtual Goods will be one of your most important tools.

One year of original data and exclusive in-depth reports delivered on a quarterly basis is $2,495 and contains:

  • A detailed overview of the current state of the industry
  • Specific estimates on market size by segment
  • Diagnosis of key opportunities and issues by segment

About the Authorsjustin-smith-headshot

Justin Smith

Founder, Inside Network

Justin Smith is the founder of Inside Network, the first company dedicated to providing news and market research to the Facebook platform and social gaming ecosystem. Justin leads Inside Network’s Inside Virtual Goods and AppData research and data services, and serves as co-editor ofInside Facebook and Inside Social Games.

Prior to Inside Network, he was formerly Head of Product at Watercooler, one of the leading application and game developers on the Facebook Platform. Prior to Watercooler, Justin was an early employee at Xfire, the largest social utility for gamers, which was sold to Viacom in 2006. Justin holds a degree in Computer Systems Engineering from Stanford University.


charles-hudson-headshotCharles Hudson

Former VP Business Development, Serious Business

Charles Hudson is the former VP of Business Development for Serious Business, a leading social games developer on the Facebook platform.

Prior to Serious Business, he was formerly the Sr. Director for Business Development at Gaia Interactive, a leading online hangout for teens. Prior to Gaia, Charles worked in New Business Development at Google and focused on new partnership opportunities for early-stage products in the advertising, mobile, and e-commerce markets. Prior to joining Google, he was a Product Manager for IronPort Systems, a leading provider of anti-spam hardware appliances that was acquired by Cisco Systems for $830 million in 2007. Charles holds an MBA and BA from Stanford University.

Get The Annual Membership

Get Annual Membership (Includes Report + 3 Additional Quarterly Issues): $2,495 $1,995 USD*

OR Buy Single Report: $995 $795 USD*

* Pre-order discount ends November 15, 2010. All pre-ordered reports will be delivered on November 16, 2010.

Although the report will not be released until next Tuesday, November 16, we are offering a special pre-order discount for those who purchase now. A one year subscription is $1,995 until November 16, at which point the price will go to US $2,495. The one year subscription includes three quarterly updates on key developments in the space.

Or, you can download just this report. The pre-order price is $795 until January 26, at which point the price will go to US $995.

Announcing Inside Social Apps InFocus 2011 – Coming January 25th in San Francisco

January 25th | San Francisco

Inside Network is proud to announce our second conference on the future of monetization on social platforms: Inside Social Apps InFocus 2011, exploring the key uncertainties and opportunities in social games and applications in 2011, happening January 25th in San Francisco.

Social applications first emerged in 2007, and are today maturing into a global media ecosystem. With the launch of the Facebook Platform, followed by platforms from MySpace and other social networks, developers worldwide could leverage the social graph to create new kinds of social experiences never before possible.

Now, three and a half years later, what started out as sheep throwing and vampire biting has quickly become a profitable billion-dollar industry, punctuated by numerous major acquisitions by the world’s leading media companies and developers. But now, new challenges are emerging, affecting big players and new entrants alike.

Inside Social Apps will investigate the latest trends and challenges for social applications, and look at what’s to come for developers throughout the space – including the growth of virtual goods and social applications on mobile devices.

What are the biggest uncertainties and opportunities facing the future of social games and applications in 2011, and who is leading the way?

Inside Social Apps InFocus 2011 – January 25th in San Francisco

Inside Social Apps InFocus 2011 takes place January 25th, 2011 at the Mission Bay Conference Center in San Francisco, and brings together the world’s leading entrepreneurs to weigh in on the future of social app and game monetization.

Inside Social Apps will be a one-day summit led by Inside Network’s Eric Eldon and Justin Smith, and will take in-depth investigative approach to the day’s discussions. At Inside Social Apps, Inside Network will work alongside founders and executives of the top social networking, social gaming, mobile social gaming, payments, and virtual goods infrastructure companies to analyze the most important issues affecting the industry. Inside Social Apps is geared towards developers on Facebook, iPhone, Android, and emerging online social platforms.

Inside Social Apps will be a content-rich day of critical discussion, followed by an evening and nighttime of casual networking.

Who Is Speaking?

We’re excited and honored to announce the following 15 confirmed speakers at Inside Social Apps InFocus 2011:

  • Atul Bagga, VP Equity Research, Games, ThinkEquity
  • Bill Gossman, CEO, hi5
  • Bret Taylor, CTO, Facebook
  • Deborah Liu, Commerce Product Marketing, Facebook
  • Eric Chu, Group Manager, Android Platform, Google
  • Jason Oberfest, VP Social Apps, ngmoco:) (now part of DeNA)
  • Kevin Chou, Co-founder and CEO, Kabam
  • Manu Rekhi, GM Games, Content, and Platform, MySpace
  • Peter Relan, Executive Chairman, CrowdStar
  • Raph Koster, Former President, Metaplace; VP Creative Design, Playdom (now part of Disney)
  • Rex Ng, Co-founder and CEO, 6waves
  • Rick Thompson, Co-founder, Playdom (now part of Disney), and Investor
  • Sean Ryan, EVP and GM Games, News Corporation
  • Sebastien de Halleux, Co-founder and COO, Playfish (now part of Electronic Arts)
  • Vish Makhijani, SVP Business Operations, Zynga
  • Eric Eldon, Editor, Inside Network
  • Justin Smith, Founder, Inside Network

A full agenda will be announced shortly. Keep an eye on InsideSocialApps.com for more information.

Register Now


A limited set of 20 “early announcement” tickets is now available at a special announcement price of $149. This price will change when these first 20 tickets are sold out. Space will be very limited, so we encourage you to register early.

From all of us at Inside Network, we hope to see you on January 25th in San Francisco!

This Week’s Headlines on Inside Social Games

ISG LogoCheck out the top headlines and insights this week from Inside Social Games – tracking all the latest developments at the intersection of games and social platforms.

Monday, October 11th, 2010

Tuesday, October 12th, 2010

Wednesday, October 13th, 2010

Thursday, October 14th, 2010

Friday, October 15th, 2010

This Week’s Headlines on Inside Social Games

ISG LogoCheck out the top headlines and insights this week from Inside Social Games – tracking all the latest developments at the intersection of games and social platforms.

Monday, October 4th, 2010

Tuesday, October 5th, 2010

Wednesday, October 6th, 2010

Thursday, October 7th, 2010

Friday, October 8th, 2010

A Look Back at Acquisitions and Investments Around Facebook in 2010

Like any large company, Facebook is forming an entire ecosystem of merger and acquisition activity. While Facebook itself has been buying an increasing number of small companies, primarily for talent, the market leaders and and venture capitalists operating on or around its platform have continued to make bigger deals.

In our most recent Facebook Quarterly Review, released last week, we listed 24 significant investments and acquisitions that have taken place recently, including among Facebook rivals. Two notable events were the Hi5 funding round by Crosslink Capital and the Slide acquisition by Google, detailed below.

Hi5

In retrospect, Hi5′s $14 million funding round led by Crosslink Capital in December looks even more interesting today. Hi5 has sought to convince game developers that social gaming on Facebook will be a short-lived phenomenon because Facebook is mismanaging how the platform serves users. Yet the whole time it has been trying to turn itself from a social network into more of a social gaming platform.

Other investors also saw opportunities beyond Facebook. In the same month as the Hi5 investment, December 2009, Union Square Ventures, an early investor in Zynga, led a $3 million round into Heyzap, which specializes in cross-platform distribution for games on the web. Meanwhile, existing developers like RockYou and Zynga looked for positioning in Asia, where Facebook isn’t strong.

Despite some MAU decreases among the top five developers on Facebook, there’s no sign of Facebook failing as a gaming platform yet. But there is still room for revenue growth, and expansion to other platforms. Facebook and other sites on the broader web can coexist as social gaming destinations — in fact, Facebook’s growing influence with Connect suggests that it will continue to play a part, wherever gaming goes.

Slide

Bought for $182 million in August by Google, Slide fell far short of the $2 billion exit founder Max Levchin originally said he wanted. But the company will still play a vital role in Google’s plans to take on Facebook, with Levchin becoming a vice president of engineering.

Slide’s specialty is in social sharing and virality, the much needed human-touch that could make Google a viable competitor. With other Google investments, Slide begins to look like part of a team. Google was responsible for five of the 24 deals we counted, spending hundreds of millions of dollars and covering its bases with buys like Jambool (virtual currency) and SocialDeck (cross-platform gaming).

For now, social games companies still look reasonably pricey, due to Disney’s up-to-$750 million July acquisition of Playdom, while investors are wary of the constant changes taking place on Facebook. However, we’re still expecting to see more M&A activity in the coming quarter; Facebook is simply too large, and too fast-growing, to scare away investors for long.

The second and third quarters of 2010 saw dozens of funding and acquisition events, each noted and detailed in the Facebook Quarterly Business Review. The Facebook Quarterly Business Review provides a comprehensive overview of hundreds of individual changes and developments, from in-depth looks at the subjects mentioned to including strategy, investments, important executive appointments, competitors and acquisition activity. The Quarterly Business Review is available through Inside Facebook Gold.






Announcing Inside Virtual Goods: Tracking the US Virtual Goods Market 2010 – 2011

With an up-to-$750 million acquisition of Playdom by Disney, an up-to-$400 million acquisition of Playfish by Electronic Arts, the acquisition of Tapulous by Disney, and hundreds of millions of dollars in venture investments, virtual goods are impacting businesses across the media landscape. Virtual goods, and the companies that create them, may be bringing the largest disruption entertainment, communication, and e-commerce infrastructure businesses have seen in years.

Inside Network is proud to announce a new original research report by Justin Smith and Charles Hudson that presents a comprehensive examination of the size and future of the virtual goods market in the United States, entitled Inside Virtual Goods: The US Virtual Goods Market 2010 – 2011. This is Inside Network’s second annual edition of the US Virtual Good Market report. It will be released on September 28, but is available for discount pre-order now.

Where will the virtual goods market go in 2011 and what are the biggest opportunities left unclaimed? How will existing players fare as Facebook continues to reshape the social gaming landscape, and larger and more sophisticated players enter the market? Inside Virtual Goods: The US Virtual Goods Market 2010 – 2011 provides deeper insight into monetization, development, and the key questions facing the space in 2011 than you’ll find anywhere else.

Get the Annual Membership
Get Annual Membership (Includes Report + 3 Additional Quarterly Issues): $2,495 $1,995 USD*
OR Buy Single Report: $995 $795 USD*
* Pre-order discount ends September 27, 2010. All pre-ordered reports will be delivered on September 28, 2010.

About the Report

Inside Virtual Goods is a new report researched and created specifically for entrepreneurs, investors, and analysts interested in the growth of this exciting new category of online commerce that is fueling the growth of games-as-a-service businesses. During a research phase spanning the last few months, co-authors Justin Smith and Charles Hudson have spoken with dozens of executives and entrepreneurs from all parts of the ecosystem in order to form what we believe are the most detailed estimates, analyses, and predictions for 2010 and 2011.

We focused and organized the report around the following areas:

  1. Social Networks, Applications, and Games - The explosion of the virtual goods market on social networks is one of the biggest stories of 2010. We delve deeply into the trends, stats, key players, opportunities, and challenges facing the space this year and next.
  2. Mobile Applications and Games – Mobile application developers that have been early adopters of the free-to-play model are now seeing significant growth in 2010. Our study breaks down the key opportunities and challenges facing this emerging space going into 2011.
  3. Casual MMOs and Virtual Worlds - Virtual worlds and casual MMOs continue to grow as a meaningful share of the virtual goods opportunity in the United States. Our study breaks down the key drivers for success in this segment, trends in monetization and engagement, and the prospects for the future.
  4. Hardcore MMOs and Free-to-Play Online Games – Developers in the MMO / MMORPG space have been among the earliest adopters of the free-to-play model. We explore why free-to-play MMOs are succeeding, revenue and user trends, and the key issues facing this space as we head into 2011.
  5. Emerging Areas: Console Games and Subscription MMOs – As the virtual goods business model becomes more well understood, it is beginning to show up in new and interesting areas of the games and entertainment landscape. We highlight a few of the more promising areas where virtual goods are emerging as a promising opportunity.

Each section contains:

  1. A brief history on the evolution and growth of this space in the US, including a description of key players.
  2. Estimates on the size of the US virtual goods market in 2010 in that area.
  3. A diagnosis of the key opportunities and issues facing the growth of that space, including our outlook and projections for 2011.

In addition, prior to delving more deeply into each market segment, we’ve provided an overview of the emerging payments ecosystem that is growing to serve these new businesses. Traditional e-commerce infrastructure providers only offer a partial solution, and the virtual goods payments layer is currently in a major state of flux. In the report, we describe the variety of solutions that have been brought to market to date, and the key challenges facing the industry from a payments perspective as a whole.

For more details, check out the full table of contents below.

The annual membership, which includes the report and three additional quarterly updates, is USD $2,495. Alternatively, you can obtain just this report for USD $995.

The annual subscription brings you a total of four comprehensive reports comprising months of original research. Recent reports have covered:

  1. The Future of Social Gaming. Social games make up over half of the US virtual goods market. This report provided detailed coverage of exactly how this industry has managed to thrive, who its most valuable players are, and deeper insight into monetization, development, and customer acquisition than you’ll find anywhere else..
  2. The Spending and Usage Patterns of the Social Gaming Audience. Who are the millions of users whose time, money, and engagement have made social games into household names and their developers into technology industry celebrities? This report presented the only independent, original research into user profiles, behaviors, and attitudes toward social games and virtual goods.

Although the report will not be released until Tuesday, September 28, we are offering a special pre-order discount for those who purchase now. The pre-order price of US $795 for this report or US $1,995 for a one-year subscription is now available until September 27.

We are looking forward to continuing to cover the evolution of the space over the coming year. We look forward to hearing from you!

Table of Contents

1. Introduction

  • How We Got Here: A Brief History of Virtual Goods Worldwide
  • Defining Terms
    • Registered users
    • Active users
    • Average revenue per user (ARPU)
    • Average revenue per paying user (ARPPU)
    • How do different developers manage their businesses?
  • Growing Virtual Goods Markets in the US
    • Social Networks, Applications, and Games
    • Casual MMOs and Virtual Worlds
    • Hardcore MMOs and Free to Play Games
    • Mobile Applications and Games
    • Emerging Areas: Consoles, Subscription MMOs
  • Methodology

2. The Virtual Goods Payments Ecosystem: An Overview

  • Large Payment Platforms
  • Mobile Payment Providers
  • Offer Providers
  • Direct Payments vs Offers
  • Pre-paid Cards
  • The Arrival of Facebook Credits
  • New Payment Providers
  • Managing Fraud
  • Related Companies

3. Social Networks, Applications, and Games

  • Introduction
    • The Global Rise of Facebook
    • The Virtual Currency Payment Ecosystem Explosion – and Migration to Facebook Credits
    • Increased Optimization for Virtual Goods
  • Social Networking Platforms Today
    • Facebook
    • MySpace
    • Twitter
    • Google
    • Others
  • Significant Changes to Facebook Platform Dynamics in 2010
    • Distribution & Engagement
    • Monetization
  • Social Application and Game Genres: How Do They Perform?
    • Role Playing Games and “Hardcore” Mini-MMOs
    • Simulation and City Building Games
    • Pet Games
    • Poker Games
    • Gifting Apps
    • Arcade Games
  • Who’s Buying Virtual Goods?
    • Gender Breakdown
    • Age Breakdown
    • Geographic Breakdown
  • How Are They Spending Money?
    • Item Type Breakdown
    • Payment Method Breakdown
  • Market Size Estimate
    • Total Number of Monthly Paying Users
    • Total ARPPU Per Month
    • Total US Virtual Goods Revenues from Social Networks in 2010
    • A Quick Look at Revenues for Top Social Game Developers
  • 2011 Outlook
    • Growth Rate
    • Major Risks that Could Hamper Growth
  • Leading Companies

4. Casual MMOs and Virtual Worlds

  • Introduction
  • Demographic Breakdown
    • Gender
    • Age
  • Payments
  • Analyzing the Market Opportunity
    • ARPU
    • ARPPU
    • Market Size Estimate
  • 2011 Outlook
    • Growth Rate
    • Key Challenges
  • Leading Companies

5. Free to Play MMOs / Hardcore Games

  • Introduction
    • History of free to play MMOs
    • Emergence of the free to play MMO market opportunity in the US
    • Major genres for free-to-play MMOs and hardcore games
  • Analyzing the Market Opportunity
    • Total Player Base
    • ARPU
    • ARPPU
    • Payment methods
  • 2011 Outlook
  • Leading Companies

6. Mobile Applications and Games

  • Introduction
    • History of virtual goods model in US
    • Major genres for free-to-play iPhone apps and games
  • Analyzing the Market Opportunity
    • Total Player Base
    • ARPU
    • ARPPU
    • Payment methods
  • 2011 Outlook
  • Leading Companies

7. Emerging Areas

  • Console Games
  • Subscription MMOs

8. Conclusion

  • Overview: 2010 Market Estimates
  • Looking Ahead: 2011

9. Appendix: Company Index

About the Authors

charles-hudson-headshotCharles Hudson

Former VP Business Development, Serious Business & Host, Virtual Goods Summit

Charles Hudson is the former VP of Business Development for Serious Business, a leading social games developer on the Facebook platform. In addition to his work at Serious Business, Charles Hudson organizes two of the leading conferences in the social gaming and free-to-play games industries, the Social Gaming Summit and Virtual Goods Summit.

Prior to Serious Business, he was formerly the Sr. Director for Business Development at Gaia Interactive, a leading online hangout for teens. Prior to Gaia, Charles worked in New Business Development at Google and focused on new partnership opportunities for early-stage products in the advertising, mobile, and e-commerce markets. Prior to joining Google, he was a Product Manager for IronPort Systems, a leading provider of anti-spam hardware appliances that was acquired by Cisco Systems for $830 million in 2007. Charles holds an MBA and BA from Stanford University.

justin-smith-headshotJustin Smith

Founder, Inside Network

Justin Smith is the founder of Inside Network, the first company dedicated to providing news and market research to the Facebook platform and social gaming ecosystem. Justin leads Inside Network’s Inside Virtual Goods and AppData research and data services, and serves as co-editor of Inside Facebook and Inside Social Games.

Prior to Inside Network, he was formerly Head of Product at Watercooler, one of the leading application and game developers on the Facebook Platform. Prior to Watercooler, Justin was an early employee at Xfire, the largest social utility for gamers, which was sold to Viacom in 2006. Justin holds a degree in Computer Systems Engineering from Stanford University.

Get the Annual Membership

The annual membership, which includes the report and three additional quarterly updates, is USD $2,495. Alternatively, you can just download this report for USD $995. Although the report will not be released until Tuesday, September 28, we are offering a special pre-order discount for those who purchase now. The pre-order price of US $795 for this report or US $1,995 for a one-year subscription is now available until September 27.

Get Annual Membership (Includes Report + 3 Additional Quarterly Issues): $2,495 $1,995 USD*
OR Buy Single Report: $995 $795 USD*

* Pre-order discount ends September 27, 2010. All pre-ordered reports will be delivered on September 28, 2010.

Facebook Grows in Latin America – What it Means for Marketers and Developers

[Editor's Note: The following is an excerpt from Inside Facebook Gold, our new data and analysis membership service tracking Facebook's business and growth. Inside Facebook Gold presents weekly in-depth analysis articles exploring the most critical developments impacting the future of the Facebook ecosystem. Click here to learn more.]

More than 70% of Facebook’s users now live outside of the United States. And yet, many of the site’s biggest brands marketers, advertisers, and developers have targeted their efforts to the English-speaking North American market. This makes sense when considering that the United States is Facebook’s #1 country in terms of absolute users, has high engagement rates, high market penetration rates, and is a lucrative and monetizable market. However, these same reasons make the US an increasingly saturated market. Marketers and developers looking to grow even more must mirror Facebook’s own growth – much of which is now happening in other countries around the world.

As Facebook continues to grow in markets outside the US, should campaigns and apps be tailored by language, region (Latin America), or country? Do localization and culturalization still matter?

Today, we take a look at the site’s growth in Latin America, a rapidly changing and growing set of markets for players in the Facebook ecosystem.

> Read more of this article on Inside Facebook Gold

This Week’s Headlines on Inside Social Games

ISG LogoFrom virtual collectible card characters to gardening and treasure hunting, the past week has shown us a variety of different types of new social game releases. In addition to these, we also saw a number of new investments and new metrics with the change in months, but without further delay, here are the headlines from this past week at Inside Social Games:

Monday, March 29th, 2010

Tuesday, March 30th, 2010

Wednesday, March 31st, 2010

Thursday, April 1st, 2010

Friday, April 2nd, 2010

This Week’s Headlines on Inside Social Games

ISG LogoIt’s a week of international imports and premieres for social startups. We have seen new levels of quality in synchronous games, automated fighting titles, and even some new lessons in tycoon zoology. Here are this week’s headlines from Inside Social Games:

Monday, March 8th, 2010

Tuesday, March 9th, 2010

Wednesday, March 10th, 2010

Thursday, March 11th, 2010

Friday, March 12th, 2010

Boomerang Networks Taking the Covers Off Its Advertising Offers Service

Boomerang Networks has spent the last year quietly building an advertising offers service designed to take on established players like Offerpal and Super Rewards. Now, it’s taking the covers off.

Every offers company is busy trying to optimize which ads appear to which users. Boomerang’s offer wall includes thumbs-up and thumbs-down buttons so users can vote on which ones they like. That’s the beginning: the company combines this user feedback with user comments, profile data — as Facebook’s and others’ terms of service allow — as well as number of clicks. Then, it analyzes the data to figure out which types of offers make the best fit between the user base (by country, age and sex), the category of application, and the price the users are typically willing to pay for the offers relative to the game. When users interact with the resulting offers, Boomerang gathers more information on their behavior and further optimizes the offers. It also has a customer service team pre-screen for deceptive offers, it says, and won’t repeatedly show offers to users who take them or vote them down.

The company has made internationalization a priority. Chief executive Honor Gunday tells us it has deals with more than 130 advertising networks around the world, so it is able to filter offers to be relevant to users in specific places. He provides a rough breakdown of what this looks like. For medium to high-engagement games in the US, offers can bring in from $1.00 to $1.50 per user; in southeast Asian countries, $0.50 to $0.80; in Latin America, $0.10 to $0.20.

The offer wall includes some other notable features. It has direct payments from more than 60 providers around the world. Although some are available through payment aggregators like PayByCash, Gunday also says that it has brought in some options not available through most rivals, such as Cherry Credits in Southeast Asia. The wall also provides categories of offers by content type and popularity, and shows banner ads. To make the experience easier for users, it also provides a detailed customer feedback form about each offer, and provides a window showing pending payouts and past offer votes.

Users also can click to view a full “customer relationship management” interface showing them the following information about each completed offer: title, date taken, status, earned or expected amount of virtual currency, payout timeframe, and user-generated quality ranking.

Boomerang’s current publicly-named clients include TheBroth and Hitgrab, and is in talks with more. The service is now live for apps on Facebook, MySpace, Hi5 and Bebo. Boomerang has raised a round of funding from angel investors, but the amount has not been disclosed.

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