I always fascinate about games, and I try my best to stay away from Facebook games as much as I could. Well, I finally can’t get a hold of myself and I play a Facebook game or two – LOL. It’s fun, but beyond that, by playing Facebook games I can learn how they work out, in term of business model.
I am recently interested in the phenomena of Facebook games as a business – sure, they are interesting and all, but I am more interested in the business side of the game apps. It seems that Facebook games are very lucrative and using Facebook apps for business branding is both effective and lucrative.
How big is the market for Facebook game apps?
Consider this fact: Facebook now definitely has over 500 million users worldwide, and the number is growing at alarming rate.
Facebook reached 250 million users mark on July 2009 (source: Mark Zuckerberg’s official blog post on Facebook) and reached 500 million users mark according to USA Today’s article on October 2010. If the growth trend continues, today Facebook users might have reached 700 million users. Wow…
How lucrative is Facebook game apps?
Enough talking; let’s get down to business, shall we? Here’s probably what online entrepreneurs have in mind: How lucrative is Facebook game apps, anyway? To answer, let’s have a look at some top social game developers’ revenues…
Zynga, one of the leading online and social gaming companies, expects revenue to reach $1.8 billion in 2011, with $630 million in profits (source: Forbes.com.)
According to a VentureBeat article: Playfish was making around $30 million in 2009; Playdom (acquired by Disney) was making $50 million in 2009. In 2011, expect those numbers to increase significantly, as the number of Facebook users has been doubled – if not tripled – during the past 2 years.
How Facebook game developers make money from their apps?
Typically, revenues come from 3 sources: Advertising, sponsorship, and virtual money required to play the game.
Advertisers and sponsors banners, links or any other messages are typically displayed in the game. More creative ways include the requirements for users to “share” advertisers or sponsors as an update on their Facebook profile pages to get virtual game money or other rewards.
All games are typically free to play. However, as you play longer, you will rise in levels or ranks; on certain levels, it’s getting harder for you to advance in the game, unless you do something about it.
Then the money game comes into play: To “speed things up” you can buy virtual money used in the game app in exchange with real money.
Not only money, since the game apps are social games, you are most probably required to “promote” the games by recommending it to your Facebook friends, “Like” the game apps, visit the sponsor’s sites to get virtual game money, or post your achievements in the game to your Facebook friends to attract your friends to play the game.
Facebook games are heavily reliant to buzz marketing – so, the more interesting the game, the better chance for a game user to recommend it to his/her network; this eventually means more money making potential for the game developers.
Facebook game apps for business branding purposes
Other than revenue-oriented, Facebook games are great for business branding purpose.
Let’s take the NBA Legend Facebook game app, for example. It is an official Facebook game of the infamous NBA (National Basketball Association,) in collaboration with Lionside, a social sport game developer.
Launched on February 2011, NBA Legend has been played by more than 1 million monthly active users. Revenue wise, it should be great: If a user just spent $1 on average for virtual money, the monthly revenue would be more than $1 million!)
What’s more, there are almost 3,000 reviews on the game and it’s getting 4.8 out of 5 rating. For the NBA, the game is beyond just money making venture; the money is most probably nice, but for a big company, such as the NBA – along with the 30 NBA franchises (a.k.a. NBA teams) – business branding is what matters most.
And it seems the game works well for enhancing the NBA branding campaign (as well as some nice share of profits for the game developer, Lionside.)
Some things to consider
Developing an interesting Facebook game is one thing, but securing capital, sponsorship and advertising deals are some of other parts of the game. All parts need to work well together in order to be a successful Facebook game app.
Please note, the potential revenue of Facebook games is great, but the examples I mention above are some of the most successful online gaming companies launching game apps on Facebook. There are probably hundreds, if not thousands of Facebook game developers trying to launch their game apps, but not as successful, even failed.
So, yes – overall, the Facebook game app business is lucrative, but launching successful Facebook game apps is challenging, indeed.
Online entrepreneurs: Are you up to the challenge?
Ivan Widjaya
Facebook games rock!