Poll: How long will it take social gaming to overtake egaming revenues?
Will social gaming revenues outstrip income from egaming activities within the coming years?
In March Raf Keustermans, CEO of social gaming operator Plumbee, wrote a piece for eGR describing how the online gambling industry’s ‘AOL moment’ was moving ever-closer.
Keustermans was referring to internet giant AOL’s acquisition of ‘old media’ company Time Warner, a move which forced the industry to acknowledge the growing significance of new media brands, and suggested that a social media giant such as Zynga was reaching a point where it could acquire an online gambling operator.
With annual revenues over $1bn, Zynga’s income sits above that of the majority of egaming operators, but it remains far ahead of many of its competitors, with its full-year figures for 2011 revealing a 23% rise in monthly active users across all products, up to 240m.
Zynga Poker (pictured) alone currently has 36.9m monthly active users according to AppData, while Double Down Casino, in comparison “ acquired by IGT for up to $500m in January “ has only 5.8m. Despite offering huge revenue potential, it is clear that fellow social gaming companies will need time to catch up on the market leader before they can match Zynga in terms of revenues.
Bwin.party are the latest egaming operator to announce their intention to develop a social gaming offering, with co-CEO Norbert Teufelberger taking charge of the newly-formed division, and an offering expected to be launched later this year. In an analyst call for the company’s annual results announcement Teufelberger admitted that he had “underestimated how powerful [social] would be.”
This was followed by Playtech announcing a commitment to invest 95m in social this year, so with leading operators and service providers looking to develop social versions of their core product offering, it is likely that social will become a key revenue stream for companies, potentially growing even faster than mobile gaming revenues.
So while Zynga has shown that social can be hugely lucrative, there will clearly be a delay as companies develop and launch their own social offerings, but once these offerings go live, how long will it take for social gaming revenues to overtake egaming income? Will it happen over the next five years, or will social prove to be the latest dot.com bubble?
Let us know what you think; vote on the poll at the right hand side of the page, or visit the eGR Linkedin group to have your say.