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Not Your Parents' Videogames

Posted by Jon Giegengack on Fri, Apr 15, 2011

When it comes to world-changing trends and technology, social media receives the majority of the limelight these days – and with good reason:describe the image

  • In only five years, Facebook has grown to more than 600 million users and a valuation of more than $50 billion.
  • Twitter—an even younger company—has 160 million users and is valued at nearly $8 billion.
  • Advertising dollars spent on social media nearly doubled in a three-year span, jumping from $920M in 2007 to $1.7B in 2010

How does this compare to gaming?

When you look at incremental growth, at first there doesn’t seem to be much of a comparison.  Between 2005 and 2008, the videogame software industry grew 17 percent. If you extend the snapshot through 2009, the recession shrinks that growth to 11 percent.  Still, not bad numbers for a consumer/retail driven industry in the midst of a massive recession.  But pretty tame compared to the social media companies like those mentioned above.

M  yy  Sales and Marketing   Marketing Team Use Web site Images Gaming Blog postHowever—the more important story is the way that gaming is being adopted by entirely new kinds of consumers who aren’t necessarily counted as being “gamers”.  Just as social media has changed the definition of “friends”, the definition of “games” and the people who play them is much broader today than it was even a year or two ago.  Here’s why: 

 

 

  • New platforms:  Online gaming has added an entirely new dimension to the gaming experience.   Today, more than 20 million Xboxes are connected (and paying subscriptions) to Xbox Live—up from 7 million in 2007.  Two million of these users were added in a single month (December 2010). 
  • New technology:  New technology like the Wii or Microsoft Kinect are redefining how videogames are played, and making them attractive to entirely new kinds of consumers.  (Who would have predicted that videogames like EA Active could be successfully created for at the fitness market?)
  • New occasions:  Mobile devices like the iPhone and iPad have created entirely new entertainment occasions.  Locations and times where access to entertainment wasn’t an option in the past are now taken for granted.  Gaming is a centerpiece of this trend.  For example: a February 2011 study shows that games make up the biggest proportion of the most popular applications in Apple’s App Store. Another example:  social gaming companies like Zynga have fused gaming with social interaction, creating millions of new users who play in different ways and for different reasons, than “traditional” gamers.   Zynga’s most popular game, Cityville, is Zynga’s most popular title and also the most downloaded application on Facebook, ever.  Within a month of being launched, Cityville had 84 million users.

 

So why is this important?

One might argue that we’re heading for a place where the reach, “stickiness”, and financial potential of gaming can compete with that of top social networks.  Consider these comparisons:

 Rockem Sockem Robots

        Social Media                  Gaming

Revenue 

Facebook’s 2010 revenue – estimated at $2 billion.

In 2010, Call of Duty: Black Ops generated more than $1 billion in revenue all by itself

Engagement The average Facebook user logs 55 minutes per day.   

The average COD player logs 87 minutes per day.  And the average Xbox Live subscriber uses the service for 3 hours a day.

Commitment

Twitter has 175 million users.  However, half of tweets come from just one-half of one percent of users.  And a 2009 study by Nielsen suggests that 60 percent of new users quit Twitter after the first month.

There are approximately 90 million users on Xbox Live and Playstation Network.  And tens of millions more who play PC and/or subscription based games like World of Warcraft.  The levels of activity vary here too—but there are no “lurkers”:  at a minimum everyone has anted up for a console or software.
Expansion Basic access to Facebook and Twitter is free. (With almost unlimited possibilities for expanding into new services for consumers, and new sources of revenue.) Most console games cost $60, with almost unlimited potential for additional downloadable content.  In addition, there are opportunities for in-game advertising and other brand extensions, an avenue where publishers have only scratched the surface.

This is not to say that social media and gaming are competing for users share of mind—on the contrary, as things progress the line between what’s social media and what is gaming will blur (and probably disappear altogether.)  But I think we’ll also find that games become an increasingly important part of what makes one social network “stickier” than another—an experience that bonds consumers to a particular platform because of the time they’ve invested and the fact that it can’t be instantly duplicated somewhere else.

Jon is a director and works on CMB’s digital entertainment projects.  He has been with the company since 2002, and can be found on Xbox Live at JonnyGNH.


Topics: mobile, social media, digital media and entertainment research