Social Media World Forum: Social Gaming Panel

And the award for “Best in Show” goes to the social gaming panel. Day 2.

I had this session double starred in my program from the get-go. Social gaming is an exploding market and contrary to popular perception, it’s not all about kids and teenage boys. This sector has serious ‘momfactor’. In a nutshell, audience, scale and enourmous commercial opportunities for brand.

Our panel of experts we’re moderated by Michael Caselli founder of Lyceum publishing and a prominent figure in the online gaming sphere. I’d seen Michael in action at the recent London Affiliate Conference and it was clear he knew his panel and his subject matter. We weren’t disappointed at Social Media World Forum, as the panel were directed in a smooth and highly relevent way, meaning we got some great stats and insights.

Panellists: Oliver Lo, Senior Marketing Manager of XPD Media/Vojo World; David Wang, CMO of SEGA Europe and Adam Caplan, VP (Virtual Currencies) Adknowledge.

As you can see, the panel is a great mix of social game providers (XPD), global gaming brand (SEGA) and monetization (Adknowledge).

MC – starts us off with reference to current monetization strategies for online games/social gaming and asks if Adam can talk us through the steps to lead generation.

Adam – with a highly engaged user base one client went straight to a virtual currency model, and saw 100x revenue increase overnight. This staggering figure is reiterated, so that there is no misunderstanding. Yes folks 100x revenue increase overnight. Adam sees a huge shift coming for many online areas that may even be considered mainstream, shifting to this model, or rather factoring a virtual currency element as a core part of a blended revenue model. Why? From their experience with the highly engaged audiences that you find in this sector, if just 5% of that audience sign-up for such content, this is a much bigger revenue win than 100% of the audience in more traditional revenue models.

MC – Is there going to be a downward pressure in the lead-gen marketplace in that case? Adam thinks no. If we look at the shift to social media, people aren’t reading newspapers anymore, they need to be rewarded for engaging with brands. Brands are wising up to this and they’re starting to see greater brand participation which is great for the sector as it’s driving buoyant CPMs.

MC – what is the main platform for eyeballs and revenue from your perspective Adam?

facebook, by far and away. In fact last year, FB paid out $100M to publishers last year, and this is the largest revenue sector for them. Clear proof of the micro-transaction model in social media.

MC – David, where do you see this market from a big brand perspective?

David stresses that these are exciting times and we’re still really early stages. We’re just starting to see organisational change, and that ROI and growth is being noticed, which is what is required to get on the agenda for larger organisations at board level.

MC – Oliver, I know that XPD moved to Beijing some time ago, and this seems to be a pretty exciting market for social gaming. How far behind is West vs East.

Oliver tells us that the West is playing catch-up in a big way. (My paraphrase). Virtual gaming is a ten-year established sector and emerged from Korea, China and Japan. Definitely not just for kids or hardcore gamers, social gaming is already mainstream, precisely because it is social. Their biggest market by far is China, and the total US market for social gaming is just one fifth that of China. A significant percentage of all time on Facebook is now spent purely on social games and the driving sector is female.

MC – Let’s talk more about monetizing social gaming and in particular FB credits. How tangible is this? A passing fad or a here to stay currency as real as the $?

Oliver – this is clearly no passing fad. They’re (FB) not closing the channels or competing here (you can buy FB credits through PayPal) but partnering. FB credits bring the brand trust with it (and of course convenience). This is a great tool for developers. More trust = more plays. (Hear hear!)

To sum up, Michael asks each panellist to give us their one-stop future tip for this sector.

Adam – social gaming will be the largest online market in 5 years time.

David – social gaming will have full mass market penetration in three years time.

Oliver – watch out for convergence between social/Facebook games and iPhone apps, which has some really exciting commercial implications.

My Summary:

Zynga (online poker, casino, farmville etc) Crowdster (#2 social gaming company globally and creators of Happy Aquarium, Happy Pets, Happy Island), XPD/Vojo (Mafia Wars, Gang Wars, Vendetta) all of these companies have social games with player volumes in the 100s of millions. These audiences are highly engaged, and they hold the household purse strings. A hugely exciting sector with numerous capabilities and monetization opportunities for brand.

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8 Responses to “Social Media World Forum: Social Gaming Panel”

  1. BeAloud says:

    The virtual goods market is already huge in Asia and in Facebook’s monetization strategy Social Gaming could make a difference.

    If Facebook Credits succeed in becoming not only cross-application, but also cross platform (starting from FB Connect on other websites or converging on Mobile apps like Oliver Lo said), and maybe an online payment system for micro-payments and online purchases, it could become a serious competitor for PayPal and Google Checkout in the future.

    Some information about Facebook Credits, its revenue split model for FB apps and exchange rate can be found here: http://www.bealoud.com/social-media/facebook-credits/

  2. Steve says:

    Virtual Bingo is the way forward then!

  3. Hi Nichola a great overview of the session. I missed this one. But I must confess, I never play online games – just for the sack of a game. I’m more likely to play an online game if it has some viral element to it – so I’m perfect candidate for brands haha

    What’s interesting, for me, is the phenomenal popularity of games like Farmville. I just don’t get it. I hear it’s addictive. And buying virtual presents. But the idea that social gaming will be the largest online market in 5 years time is compelling. I can see it is heading that way too (i.e. Farmville’s popularity).

    Newspepper.com recently produced a behind-the-scenes video called Inside: Mind Candy – a social gaming company- for their recruitment drive. So anyone looking for gaming dev job should have a looksie.

    The signs are there. Lots to think about… :)

    Chloe

  4. @BeAloud – Its so interesting actually just HOW HUGE the virtual gaming sector already is in Asia. I interviewed Oliver yesterday, before he flew back to Beijing (where XPD are HQ’d) and he gave me some pretty awesome stats and market insights. Make sure you’re following me on twitter http://twitter.com/nicholastott as I’ll be sure to tweet the link when I’ve written it up. You might find it interesting

    Thanks for the FB credits link. I’m looking for any education I can get my hands on in this sector, so really useful!

    @Steve – game on!

    @Chloe – I’ve always been with you in terms of not participating myself; however I think given the way this market is going I’ve got to at least have a splash (out of nothing other than professional interest of course).

    If the Newspepper video is live yet feel free to come and drop a link in the comments here as it sure sounds interesting a relevent to our audience.

  5. John says:

    If only I had the ability to write an application for face book, I could set myself up for retirement considering the amount of people using now and in the future. HHmmm, I think a career change is in order!

  6. Carry Gomes says:

    I love this list! I’m excited to see how these start ups start stirring things up. It’s about time talented folks like the fabulous Terry Redfield are revealed. Go Gamer Girls AND go women of today being represented in the gaming industry. Bravo, Ladies!

  7. Hey Nic,

    Sure! Newspepper.com made a behind-the-scene video about Mind Candy (online social gaming company). You can watch the video here:

    http://vimeo.com/9740671

    Cx

  8. CostaRica says:

    Haha I love Cary Gomes’s statement about start ups. I have heard nothing but good things of start up game called Karma Kingdom, I love the idea of taking actual life and growing awareness thru the only way tangible to certain types of people.

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