Inside Facebook

It’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

• CrowdStar Learns Facebook Zoology with Zoo Paradise
• Mochi Media Announces Social API, $10 Million Fund for Flash and Social Games
• Fast Typing, Cities and Growth from MindJolt on This Week’s List of Fast Facebook Growers by Monthly Active Users
• Gravity Bear Weights In to Social Gaming on Facebook with Battle Punks

Tuesday, March 9th, 2010

• Sony Online Entertainment Launches PoxNora on Facebook
• SiXiTs: A New Cross-Platform Startup Founded by Gaming and Visual Effects Veterans
• Super Rewards Brigns Offer Wall Service to Flash Games for the Web

Wednesday, March 10th, 2010

• CyberAgent’s Ameba Pigg Virtual World Comes to Facebook as Ameba Pico
• Slides from Presentation at GDC on the State of the Social Gaming Industry
• Facebook Credits Now the First Payment Option in Zynga’s FarmVille Game
• City Building Games Make a Strong Showing in This Week’s List of Top Facebook Gainers by Daily Active Users
• MySpace Looks for More Social Game Developers with Big Platform Upgrades

Thursday, March 11th, 2010

• Feline Frenzy: Robot Wars is a New Facebook Game from Pakistani Developer White Rabbit
• Hi5 Launches Game Developer Program, Offers Special Access to Users and Monetization
• More Speakers, Venue Set for Inside Social Apps 2010 – April 20th in San Francisco
• Israeli Brewer Uses Facebook Gender Battle Parking App to Promote Beer

Friday, March 12th, 2010

• MyTribe Wants to Be a Complex, Engaging Facebook Game – And Mostly Succeeds
• Playdom’s Social City is the Latest Facebook City Building Game to Get Millions of Users
• Social Gaming Roundup: iPad, Frosmo, Statistics, & More
• Independent Developers Show Strongly on This Week’s List of Emerging Facebook Games

In the past week, the social gaming space has seen quite a stir. Not only has there been a handful of significant acquisitions and new numbers from this month’s Top 25 lists for both MySpace and Facebook, but there may be a new social genre boom on the horizon: city building. Big players such as Playdom and Digital Chocolate released their own SimCity-like titles. Here are the headlines for this past week from Inside Social Games.

Monday, March 1st, 2010

• Four for Slide and the ABCs of This Week’s Top Gaining Facebook Games by Monthly Active Users
• Facebook Blocked in China, But Chinese Game Developers Coming to Facebook
• Digital Chocoltate Jumps into Facebook City Building with NanoTowns
• King of KungFu Battles for Facebook Users
• Content-Sharing, Virtual Goods Helped Slide Double its User Base in February

Tuesday, March 2nd, 2010

• The Top 25 MySpace Games for February, 2010
• The Top 25 Facebook Games for February, 2010
• Hi5 Announces Support for Facebook Platform APIs, Targeting Social Game Developers
• Social Games Plant the Seeds for Growing Online Communities

Wednesday, March 3rd, 2010

• Big Developers Make Faltering Gains on This Week’s List of Top Growing Facebook Games by Daily Active Users
• Playdom Constructs Its Own Facebook City Builder: Social City
• Playdom Continues Acquisitions with OffBeat Creations Purchase
• Former MySpace CEO DeWolfe Makes Social Gaming Move with MindJolt Purchase

Thursday, March 4th, 2010

• German Developer Plinga Makes Turtle Soup Out of Worms for Facebook Users
• Enter into MMO Ninja Action Against Facebook Friends with Nindou International
• MindJolt’s Value to Buyer: A Whole Lot of Games, and a Platform for Many More

Friday, March 5th, 2010

• Tencent Localizes QQ Ranch to Facebook with Ranch Life
• Virtual Cities and Casinos Top This Week’s List of Emerging Facebook Games
• Zynga, Pladom, Other Big Social Game Developers Getting the Most Trademarks
• Social Gaming Roundup: Free Games, the iPad, Assassin’s Creed, and More

As new acquisitions churn the social games industry, developers continue on with new games ranging from fight filled flora to locals of a more tropical destination. Here are the headlines from Inside Social Games.

Monday, February 22nd, 2010

• Zynga and Slide Hold Down This Week’s List of Top Facebook Games by Monthly Active Users
• Merscom Makes a Tower Defense Facebook Game for “The Crazies” Movie
• Facebook Sponsored Ads Show Games that Use Its Credits Virtual Currency
• Killing Time in Peace with Absolute Solitaire on Facebook

Tuesday, February 23rd, 2010

• Ngmoco Raises $25M Third Round, Makes Small Acquisitions, Plans More Free-to-Play iPhone Games
• Conduit Labs’ Music Pets Amps Up the Facebook Pet-Caring Genre
• WildTangent Introduces Its Incentivized Advertising Services to Social Games
• Tiki Resort: Playdom’s Latest Facebook Game Brings the Amusement Theme to Tropical Islands

Wednesday, February 24th, 2010

• Happy Island, MindJolt, and Yet More Zynga on This Week’s Top Facebook Gainers by Daily Active Users
• Emily’s Girl Talk – An iPhone Game for Young Women
• More Details on Inside Social Apps 2010 – Coming April 20th in San Francisco
• Hi5 Beefs Up Social Games Platform with Purchase of Big Six
• Selling Digital Goods: Stay Safe and Reap the Rewards

Thursday, February 25th, 2010

• Japanese Developer C.A. Mobile Gets Into Facebook with Bingo Derby
• PopCap Brings Plants vs. Zombies to the iPhone with Gusto
• 10 Potential iPad Games and Concepts to Build (Plus Bubble Ghost)

Friday, February 26th, 2010

• Gambling Madness, Islands and Mahjongg on This Week’s List of Emerging Facebook Games
• 5 Tips for Using Discount Pricing to Maximize Revenue in Social Games
• Social Gaming Roundup: Hello Kitty Fundraiser, gWallet, Playfish, Hi5, and More

Tracking the innovation between gaming and social networks, Inside Social Games has seen a great deal of new developments this past week ranging from blood sucking vampires to new World of Warcraft feeds on Facebook. Here are the headlines for the first week of February:

Monday, February 1st, 2010

• Solid Gains for Islands, Fighters and Zynga in This Week’s Top Facebook Games by Monthly Active Users‘
• The Top 25 Facebook Games for January, 2010
• The Top 25 MySpace Games for January, 2010
• Hit or Not: A Facebook Role-Playing Game Designed to Help Real Musicians

Tuesday, February 2nd, 2010

• OMGPOP Gives Users Virtual Currency Bonus for Syncing Accounts with Facebook Connect
• Vivox Raises $6.8 Million for Voice Services in Games
• Bubble Island: This Facebook Title Makes a Classic Arcade Game More Social
• Facebook Application Gating and Gifting Features Shift to Fit Changing Platform Policies

Wednesday, February 3rd, 2010

• Bejeweled, Happy Baby and My Town Top This Week’s Facebook Gainers by Daily Active Users
• World of Warcraft Launches The Armory Application for Facebook
• City of Eternals, a New Blend of Social and MMO Gaming, Goes into Public Beta
• Kwedit Launches New Direct and Virtual Debt Payments Service

Thursday, February 4th, 2010

• Tiny Town: a New Facebook City Building Game
• Two Simple Facebook Games to Make You Smile
• Hi-media’s Allopass Payment Service Expands in the US, Focusing on Social Networking and Games
• Zynga Brings FarmVille, Social Gaming to MSN

Friday, February 5th, 2010

• City Builders Replace Gangsters on This Week’s List of Emerging Facebook Games
• Ngmoco CEO Neil Young on the iPad, Monetization, and Challenges for New Mobile Developers
• Papermint: An Illustrated, Very Colorful New Virtual World
• Social Gaming Roundup: Valentine’s, Charity, the iPad, and More

2009 will be remembered as the year that casual gaming stormed social platforms and changed the way millions of people socialized with friends online. With an up-to-$400 million acquisition of Playfish by Electronic Arts, hundreds of millions of dollars in venture investments, and some of the highest engagement numbers that online entertainment has ever seen, social games are now impacting businesses across the media landscape. It’s become clear that there are substantial opportunities for social game developers with virtual goods revenue models, but the market is still evolving rapidly.

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

That’s why I’m excited to release today a new exclusive original research report with co-author Charles Hudson in our Inside Virtual Goods series that is exclusively focused on the future of the social gaming market, entitled Inside Virtual Goods: The Future of Social Gaming 2010.

How big is the market, and where will social gaming go in 2010? How will existing players fare as Facebook shifts the social gaming landscape, and larger and more sophisticated players enter the market? Inside Virtual Goods: The Future of Social Gaming 2010 provides deeper insight into social game monetization, development, customer acquisition, and the key questions facing the space in 2010 than you’ll find anywhere else.

About the Report

Inside Virtual Goods: The Future of Social Gaming 2010 gives you an inside view of the future at this critical juncture in the intersection of social networking and online games. The big picture? We estimate that the US virtual goods market will reach $1.6 billion in 2010, and that social gaming market will contribute $835 million of that total this year.

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. At over 140 pages, Inside Virtual Goods: The Future of Social Gaming 2010 takes the closest look at the present state of social games and the future of what’s shaping up to be a very fundamentally strong and profitable industry.

What We Cover

1. Emerging 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 2010.
3. Monetization Data and Payment Trends – Now that developers have proven the virtual goods model, what are ARPUs 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 offers and alternative payments for virtual goods. We cover:
   • The offers ‘scandal’ and what will it mean going into 2010
   • Changes that advertisers and payments companies have – and haven’t – made
   • How both direct and alternate payment methods are most likely to grow or contract in the coming year.
4. Customer Acquisition and Marketing Trends – As the social gaming landscape has evolved over the past two 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 – Just when social game developers were settling in, Facebook announced major adjustments that will dramatically alter 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 2010, including estimates on the “big three” developers.
• Our take on the key issues facing the growth of social gaming, including our outlook and projections for 2010.

See the full table of contents below:

Table of Contents

Appendix of Related Companies includes: 51.com, 6Waves, Activision, AddictingGames, AdNectar, AdParlor, Amazon, AOL, Apple, Atari / Cryptic Studios, BigFish Games, BigPoint, Blizzard, Boku, Boomerang Networks, Crowdstar, DeNA, DoubleDing, Digital Sky Technologies, Electronic Arts, Facebook, Firecue, Friendster, Gambit, Gameloft, Glu, GMG Entertainment, Google, GratisPay, Gree, Green Patch, gWallet, hi5, InComm, Kaixin001, Kongregate, Live Gamer, LOLapps, Microsoft, Mixi, MSN, MySpace, Nexon, ngmoco, Offerpal Media, OpenFeint, Orkut, PayPal, Peanut Labs, Playdom, Playfirst, Playfish, PlaySpan / Spare Change, Pogo, PopCap Games, QZone, Real Networks, RenRen / Xiaonei, RockYou, Serious Business, SGN, Shanda, Social Hour, Social Reach, SocialGold / Jambool, SponsorPay, Super Rewards / Adknowledge, SupersonicAds, Target, Tatto Media, Tencent, The9, TokenAds, TrialPay, Twitter, Ubisoft, Viacom, VKontakte, Yahoo, Zong, Zynga

More Data, More Actionable Insights

In 2009, social games began to show what kind of value can be created on top of social networks. 2010 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

Get The Annual Membership

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

OR Buy Single Report: $995

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.

2009 will be remembered as the year that casual gaming stormed social platforms and changed the way millions of people socialized with friends online. With an up-to-$400 million acquisition of Playfish by Electronic Arts, hundreds of millions of dollars in venture investments, and some of the highest engagement numbers that online entertainment has ever seen, social games are now impacting businesses across the media landscape. It’s become clear that there are substantial opportunities for social game developers with virtual goods revenue models, but the market is still evolving rapidly.

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 January 25, 2010. All pre-ordered reports will be delivered on January 26, 2010.

That’s why we’re excited to announce a new exclusive original research report with co-author Charles Hudson in our Inside Virtual Goods series that is exclusively focused on the future of the social gaming market, entitled Inside Virtual Goods: The Future of Social Gaming 2010. It will be released on Tuesday, January 26, but is available for discount pre-order for the next 7 days.

How big is the market, and where will social gaming go in 2010? How will existing players fare as Facebook shifts the social gaming landscape, and larger and more sophisticated players enter the market? Inside Virtual Goods: The Future of Social Gaming 2010 provides deeper insight into social game monetization, development, customer acquisition, and the key questions facing the space in 2010 than you’ll find anywhere else.

About the Report

Inside Virtual Goods: The Future of Social Gaming 2010 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. At over 80 pages, Inside Virtual Goods: The Future of Social Gaming 2010 takes the closest look at the present state of social games and the future of what’s shaping up to be a very fundamentally strong and profitable industry.

What We Cover

1. Emerging 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 2010.
3. Monetization Data and Payment Trends – Now that developers have proven the virtual goods model, what are ARPUs 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 offers and alternative payments for virtual goods. We cover:
   • The offers ‘scandal’ and what will it mean going into 2010
   • Changes that advertisers and payments companies have – and haven’t – made
   • How both direct and alternate payment methods are most likely to grow or contract in the coming year.
4. Customer Acquisition and Marketing Trends – As the social gaming landscape has evolved over the past two 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 – Just when social game developers were settling in, Facebook announced major adjustments that will dramatically alter 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 2010, including estimates on the “big three” developers.
• Our take on the key issues facing the growth of social gaming, including our outlook and projections for 2010.

See the full table of contents below:

Table of Contents

Section I: Overview

1. The Evolution of Social Gaming

• What is Social Gaming?
• Why do Social Games Work?
• A Brief History of the Major Eras in Social Gaming
  • Era I – The Virality Era
  • Era II – The Emergence of Paid Distribution
  • Era III – Rise of the Big 3 and the Network Model

2. Social Game Development and Design Processes

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

3. Social Game Design and Game Mechanics

• Emergence of Key Genres
• Fast Followers vs Innovators
• Templates / Engines
• Intellectual Property
• Barriers to Entry

4. Monetization

1. How do social games monetize?
   • Virtual Goods
     1. Functional Virtual Goods
     2. Decorative Virtual Goods
     3. Consumables
   • Advertising
     1. Sponsorships
     2. White Label Games
     3. Branded Virtual Goods
2. Monetization Rates
   • How do social game developers manage their businesses?
     1. Social RPGs
     2. Farm Games
     3. Pet Games
     4. Aquarium Games
     5. Poker Games
     6. Flirting Games
     7. Arcade Games
   • Monetization rates of key social game genres
   • How has monetization changed over the last year?
3. Consumer Demographics
4. Payments Breakdown
   • Understanding Offers and the Offer Controversy
     1. The Offer Controversy
     2. Offers in Social Games
     3. Increased Competition
   • Mobile and Alternative Direct Payments
     1. Large Payment Platforms
     2. Direct Payments vs Offers
     3. Direct Payments Breakdown in Social Games
   • Direct Payments
     1. Mobile Payments
     2. Pre-Paid Cards
     3. New Payment Providers
5. Lifetime Value of Social Game 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 Rise, Fall, and Re-rise of Viral Acquisition
• Cross Promotion
• Paid Acquisition
  • Facebook Ads
  • Third-party Facebook Platform Ad Networks
• Network Strategy and Economies of Scale

6. 2010 Market Size and Top Developers Revenue Estimates

• 2010 Social Gaming Market Size
• Top Developer Revenue Estimates
  • Zynga
  • Playfish
  • Playdom
  • Crowdstar

Section II: The Future

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

• Impact of Platform Changes
• Developers and Advertising Spend

2. What does the emergence of the big 3 mean for small and medium sized developers?

• Marketing and Customer Acquisition
• The CrowdStar Example
• Can an independent developer dominate a category?

3. Facebook Credits, Offers, and the Changing Monetization Landscape

• Impact of Facebook Credits
• Offers and Performance Advertising
• Role of Alternative Payment Systems

4. Off-Network Games with Facebook Connect

• Intersection of Social and Mobile
• Open Internet – Farmville.com and Facebook Connect

5. Will Another Platform Other Than Facebook Emerge?

• MySpace
• Twitter
• Global Social Networks
• Global Portals
• Search Engine Application Platforms

6. Investment Landscape

• Venture Capital
• M&A and IPO Landscape

7. Competitive Response in the Broader Media and Games Industry

• Casual game developers
• Console Games Companies
• Casual MMOs and Virtual Worlds
• Diversified Media Companies

More Data, More Actionable Insights

In 2009, social games began to show what kind of value can be created on top of social networks. 2010 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

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 January 25, 2010. All pre-ordered reports will be delivered on January 26, 2010.

Although the report will not be released until next Tuesday, January 26, we are offering a special pre-order discount for those who purchase now. A one year subscription is $1,995 until January 26, 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.

2009 will be remembered as the year that casual gaming stormed social platforms and changed the way millions of people socialized with friends online. With an up-to-$400 million acquisition of Playfish by Electronic Arts, hundreds of millions of dollars in venture investments, and some of the highest engagement numbers that online entertainment has ever seen, social games are now impacting businesses across the media landscape. It’s become clear that there are substantial opportunities for social game developers with virtual goods revenue models, but the market is still evolving rapidly.

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 January 25, 2010. All pre-ordered reports will be delivered on January 26, 2010.

That’s why I’m excited to announce today a new exclusive original research report with co-author Charles Hudson in our Inside Virtual Goods series that is exclusively focused on the future of the social gaming market, entitled Inside Virtual Goods: The Future of Social Gaming 2010. It will be released on Tuesday, January 26, but is available for discount pre-order now.

How big is the market, and where will social gaming go in 2010? How will existing players fare as Facebook shifts the social gaming landscape, and larger and more sophisticated players enter the market? Inside Virtual Goods: The Future of Social Gaming 2010 provides deeper insight into social game monetization, development, customer acquisition, and the key questions facing the space in 2010 than you’ll find anywhere else.

About the Report

Inside Virtual Goods: The Future of Social Gaming 2010 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. At over 80 pages, Inside Virtual Goods: The Future of Social Gaming 2010 takes the closest look at the present state of social games and the future of what’s shaping up to be a very fundamentally strong and profitable industry.

What We Cover

1. Emerging 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 2010.
3. Monetization Data and Payment Trends – Now that developers have proven the virtual goods model, what are ARPUs 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 offers and alternative payments for virtual goods. We cover:
   • The offers ‘scandal’ and what will it mean going into 2010
   • Changes that advertisers and payments companies have – and haven’t – made
   • How both direct and alternate payment methods are most likely to grow or contract in the coming year.
4. Customer Acquisition and Marketing Trends – As the social gaming landscape has evolved over the past two 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 – Just when social game developers were settling in, Facebook announced major adjustments that will dramatically alter 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 2010, including estimates on the “big three” developers.
• Our take on the key issues facing the growth of social gaming, including our outlook and projections for 2010.

See the full table of contents below:

Table of Contents

Section I: Overview

1. The Evolution of Social Gaming

• What is Social Gaming?
• Why do Social Games Work?
• A Brief History of the Major Eras in Social Gaming
  • Era I – The Virality Era
  • Era II – The Emergence of Paid Distribution
  • Era III – Rise of the Big 3 and the Network Model

2. Social Game Development and Design Processes

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

3. Social Game Design and Game Mechanics

• Emergence of Key Genres
• Fast Followers vs Innovators
• Templates / Engines
• Intellectual Property
• Barriers to Entry

4. Monetization

1. How do social games monetize?
   • Virtual Goods
     1. Functional Virtual Goods
     2. Decorative Virtual Goods
     3. Consumables
   • Advertising
     1. Sponsorships
     2. White Label Games
     3. Branded Virtual Goods
2. Monetization Rates
   • How do social game developers manage their businesses?
     1. Social RPGs
     2. Farm Games
     3. Pet Games
     4. Aquarium Games
     5. Poker Games
     6. Flirting Games
     7. Arcade Games
   • Monetization rates of key social game genres
   • How has monetization changed over the last year?
3. Consumer Demographics
4. Payments Breakdown
   • Understanding Offers and the Offer Controversy
     1. The Offer Controversy
     2. Offers in Social Games
     3. Increased Competition
   • Mobile and Alternative Direct Payments
     1. Large Payment Platforms
     2. Direct Payments vs Offers
     3. Direct Payments Breakdown in Social Games
   • Direct Payments
     1. Mobile Payments
     2. Pre-Paid Cards
     3. New Payment Providers
5. Lifetime Value of Social Game 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 Rise, Fall, and Re-rise of Viral Acquisition
• Cross Promotion
• Paid Acquisition
  • Facebook Ads
  • Third-party Facebook Platform Ad Networks
• Network Strategy and Economies of Scale

6. 2010 Market Size and Top Developers Revenue Estimates

• 2010 Social Gaming Market Size
• Top Developer Revenue Estimates
  • Zynga
  • Playfish
  • Playdom
  • Crowdstar

Section II: The Future

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

• Impact of Platform Changes
• Developers and Advertising Spend

2. What does the emergence of the big 3 mean for small and medium sized developers?

• Marketing and Customer Acquisition
• The CrowdStar Example
• Can an independent developer dominate a category?

3. Facebook Credits, Offers, and the Changing Monetization Landscape

• Impact of Facebook Credits
• Offers and Performance Advertising
• Role of Alternative Payment Systems

4. Off-Network Games with Facebook Connect

• Intersection of Social and Mobile
• Open Internet – Farmville.com and Facebook Connect

5. Will Another Platform Other Than Facebook Emerge?

• MySpace
• Twitter
• Global Social Networks
• Global Portals
• Search Engine Application Platforms

6. Investment Landscape

• Venture Capital
• M&A and IPO Landscape

7. Competitive Response in the Broader Media and Games Industry

• Casual game developers
• Console Games Companies
• Casual MMOs and Virtual Worlds
• Diversified Media Companies

More Data, More Actionable Insights

In 2009, social games began to show what kind of value can be created on top of social networks. 2010 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.

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In the modern, interconnected world of international finance, DST’s investments in Facebook and Zynga are, generally speaking, not surprising. Sovereign wealth funds have billions invested in banks, government loans, and most other assets around the world.

The most striking things about DST are that it’s Russian (not, say, from western Europe or Japan), and that it is purchasing shares of high-profile Silicon Valley web companies.

The firm announced it had led Zynga’s $180 million round, earlier this week, including what we’ve heard is $50 million for employee and investor shares. At the same time, it has continued purchasing Facebook shares from former employees, after having bought $200 million in Facebook company and employee stock earlier this year.

Neither Facebook nor Zynga are planning to go public any time soon, as the companies have been saying for months. These stock sales, as investors will tell you, is a twist on how private companies have normally had liquidity events — typically it’s a sale or an initial public offering.

We caught up with DST partner Alexander Tamas earlier this week. He’s an experienced banker, based out of London, who helped put the Zynga deal together. Here are some key points that he shared with us.

Inside Facebook: Why no initial public offering for Zynga? How did you get involved in the deal?

Alexander Tamas: Zynga didn’t need an IPO, from a business perspective — the main reason to consider it was liquidity for employees and early investors.

We’ve done well with mail.ru and our gaming companies. We’ve seen success from people paying rather than advertising. We thought: this should fundamentally work in the western world. The common thought had been that users don’t pay in western markets. We reached out to Zynga about a deal.

Zynga is going to be acquisitive in the merger and acquisition scene going forward. Right now, we think that Facebook and Zynga are in their really early stages.

IF: Can you tell us any more about the valuation or the terms that stockholders are getting?

AT: We can’t comment on that. We’d agreed we wouldn’t go into detail.

IF: How does the Zynga investment, and the Facebook investment, fit into DST’s overall plans?

AT: We’re looking for extremely high growth profile web companies. We’re pretty agnostic when it comes to the location of the company. We thought Mark Pincus [the founder and chief executive] and the other founders we invest in have a strong vision for the future, rather than trying to sell in one or two years. And in terms of market position, we invest in companies that are at the top. We think that the number one players can get a disproportionate share of the market.

IF: What about strategic relationships between Zynga, Facebook, and other investments? DST has been separately been buying shares in — if not outright owning — Russian and Eastern European social networks and online gaming companies.

AT: I think in terms of openness when it comes to working together. We do facilitate introductions, if that means we do an intro to a company we own in region. We don’t get involved in operations at Zynga and Facebook.

IF: Can you tell us any more about the relationship between Facebook and Zynga, and how the DST connection fits in?

AT: Overall, Zynga is obviously an important part of the Facebook platform, because it draws a lot of people to the site every day.

IF: A lot of publications have covered the ties between DST and Russian businessman Alisher Usmanov. How do you respond to allegations that he has connections with criminal or otherwise corrupt outfits?

He’s a well-respected businessman in Russia. I also think people take him out of context — he’s only one of our investors overall. DST is still controlled by its founders [Yuri Milner and Gregory Finger]. We have a bunch of other well-respected minority investors, like Goldman Sachs [Note that Tamas and another DST partner, Verdi Israelian, have also both worked at Goldman Sachs].

IF: What are DST’s long-term plans?

We’re organized as a company, not as a fund. We don’t need to distribute money to investors. That means we can take 5 10 15 year view on these companies. This is why it’s so important to find founders who are working for the long-term. The way that people get liquidity is trading in DST shares. There may be a DST IPO at some point, which would give our investors liquidity without them having to sell shares in DST.

We’re more like Berkshire Hathaway than a venture capital firm. That’s what resonated with Mark Pincus and Mark Zuckerberg. We told them: “You’ll never have any pressure to sell or go public. You won’t have to do what’s not right for the business.”

In the largest funding to date in social gaming, leading developer Zynga Tuesday night announced it has raised $180 million from a group of investors led by Russian investor Digital Sky Technologies. Some of the money will be used for expansion, but some will also be used to let employees and investors sell a portion of their stock.

The significance of the move, as we covered on Inside Social Games, is that the company is not planning to go public any time soon. With revenue of more than $200 million this year, and the new funding money available for internal growth or acquisitions, it does not have a clear reason to expose itself to the demands of the public markets. In an interview with DST partner Alexander Tamas, he reiterated to us that Zynga — like Facebook — didn’t need the money, but rather wanted to provide liquidity for employees and investors.

The funding will also play an important role in fending off what appears to be increasing competition.

One rival, Playfish, was purchased by gaming giant Electronic Arts earlier this fall in a deal worth up to $400 million. Now, Playfish’s executives are taking leading roles within EA. Not only do they have EA’s money, engineering talent, and marketing muscle, at their disposal, but also EA’s long list of gaming franchises. Perhaps next year we will see versions of, say, FIFA, Madden, or The Sims emerge as Facebook apps, or as sites that allow people to play with friends Facebook Connect.

Another long-time competitor, Playdom, has also recently raised a significant $43 million round with the intention of continuing to grow from its core user base on MySpace on to Facebook.

Meanwhile, a crop of new social gaming rivals have emerged, notably CrowdStar. That company has been able to generate a string of games in the last few months that have grown to millions of users.

And not to be forgotten, other traditional gaming companies are also seeing some good results. Popcap Games, for example, has seen a solid success in the Facebook version of its classic Bejeweled Blitz game. Other gaming companies, from Asian massive multiplayer online game developers to casual and Flash game developers, and virtual worlds, all are increasing their experimentation with social gaming on Facebook.

If Zynga is going to go public, it will need to prove to the market that its popularity and its revenue streams are here to stay. Satiated employees and money in the bank are two key ways for it to accomplish this. Look for it to buy more small game developers that fit into its strategic goals.

“Zynga is going to be acquisitive in the merger and acquisition scene going forward,” Tamas tells us.

Raising the money from DST also firms up the connection between Zynga and Facebook itself. The group of investors that DST led includes hedge fund Tiger Global, Institutional Venture Partners and Andreessen Horowitz. Not only is DST a major investor in Facebook, but Marc Andreessen, the cofounder of Andreessen Horowitz, is also on Facebook’s board of directors.

To dig deeper into the virtual goods market, check out our new report: Inside Virtual Goods: The US Virtual Goods Market 2009 – 2010.

The social world moves fast; almost as fast as all the hustle and bustle of holiday shopping. Well, if you were out buying gifts, or just happened to blink for a moment, here are this week’s headlines from Inside Social Games.

Monday, November 30, 2009

• New Records For FishVille and Café World on This Week’s Top Facebook Applications List
• Tap Tap Revenge 3 Adds Facebook Connect
• Ngmoco’s Free-to-Play iPhone Game Hits the Top Grossing Apps List
• Hi5 Gets Gaming Veteran as President and CTO

Tuesday, December 1, 2009

• Top 25 Facebook Games for December 1, 2009
• Top 25 MySpace Games for December 1, 2009
• With $12.5 Million in New Funding, gWallet Aims at Social Advertising Offers Industry
• HeyZap Adds Dual-Currency Option to its Flash Gaming Platform

Wednesday, December 2, 2009

• Does Stealing Make Facebook Fish Games Stickier?
• The Holdiay Weekend Was Good for Our Top 20 Daily Gaining Facebook Games
• Playdom Co-founder Investing in “Original IP” Social Gaming Startups
• Game Ventures Takes a Swing at Social Sports with Cricket Game HowZat

Thursday, December 3, 2009

• EA’s Battlefield Heroes Has Virtual Economy Troubles
• Booyah’s MyTown: Location-Based Gaming Meets Monopoly
• Another Month, Another Zynga Game Launches: Say Hello to PetVille
• Offerpal Lets Users Earn Virtual Currency Through Online Retail Purchases

Friday, December 4, 2009

• Harbor Havoc 3D: If Only Airports Were This Fast…
• More New Games on This Week’s Up-and-Comers List
• Restaurant Life Brings Quality New Ingredients to Social Restaurant Gaming
• Slide Launches New Animal-Raising Game SPP Ranch