It all started with Farmville.
In 2009, Zynga released the immensely popular game that, to this day, continues to crowd newsfeeds and plague us with unsolicited invitations.
And despite the fact that Farmville has become the butt of many a joke, games that can be played over social media continue to gain popularity. So much so, that the social gaming market in the US is expected to post a CAGR of 19.63% from 2015-2019.
Americans are spending less on social games. So what’s generating growth?
Overall, people in the US actually spent less time and less money on social games in 2014 than they did in 2012.While this might seem counterintuitive to positive market growth, it actually makes sense if you look to internet penetration in the country.
In December 2014, the Internet penetration in the US was recorded at 86.75%. Internet users in the country accounted for 9.58% of the global Internet user base, with about one-third of these being classified as social gamers.
The implication here is that even though Internet penetration is high in the US, social gaming hasn’t reached saturation. This provides vendors like Electronic Arts, King Digital Entertainment, Peak Games, Wooga, and Zynga the opportunity to capture untapped market potential by developing innovative social games to attract new gamers (which also boosts market growth).
Rise in the free-to-play model and spending on virtual goods spurring growth
Another big reason for the surge in market growth is the rise in the free-to-play or F2P model.
F2P is a revenue model that allows users to play games on a social media platform or network, free of cost. This model is becoming popular among vendors as it enables them to capture a larger user base and also helps generate revenue through other means such as in-game purchases, which involves the buying of virtual goods and the integration of advertisements into games.
Basically, F2P is used to lure gamers in, and get them hooked enough that they might be willing to pay to advance in the game, or even purchase virtual goods to help their gameplay.
This is where the social gaming market makes its money. In 2014, the virtual goods segment dominated the market, accounting for a share of 56.38% and a revenue contribution of $2.33 billion. Virtual goods will continue to be the key revenue driver and overall bread and butter of social gaming market in the US through the projected period.