SBC News Social games to reach US$7bn revenues by 2015

Social games to reach US$7bn revenues by 2015

The global industry body representing social games companies with over 300 million players, the International Social Games Association (ISGA), has released research by Harvest Strategy into the evolution, use and impact of social games. The report undertakes both a review of existing academic literature and data surrounding social games as well as a survey of consumer behaviour and perceptions across Australia, the UK, France and the US, “the 2014 Consumer Survey.”

Social games are an increasingly important part of the digital economy. The report states that the industry is projected to reach US$7 billion in revenue by 2015 and it is estimated than 34% of the total Internet population will be playing social games this year. Games are far from just for young people. The researchers’ comprehensive review of demographic data shows no gender bias and that the average player is 40 years old. This supports the ISGA’s own recently collated data on the audience for its members’ social games, which shows that 99.5% of users are over 18.

The report demonstrates that social games played on mobile devices are a natural technological evolution of traditional games practices based around strategy, skill, chance and social interaction, and that the rise of the “freemium pricing” model has been driven by underlying changes in technology and consumer behaviour. The ease of online digital distribution and the continuing problem of piracy have forced downward pressure on prices. The diffusion of mobile technology (for example smartphones and tablets) has driven demand for more flexible game playing experiences. The freemium pricing model has enabled the video games industry to successfully harness these changes in technology and consumer demand.

Amongst the report’s findings are that in-game expenditure is typically low and that average players are spending no money on games at all. According to the 2014 Consumer Survey, a high proportion of people playing social games are not spending money on in-app purchases. Less than 1 in 10 players spent money on a social game on their last playing occasion. Those players that do make in-app purchases are spending low amounts, typically less than one unit of local currency (i.e. 87% of French transactions were less than €1, and 90% of UK transactions were less than £1).

Contrary to speculation by commentators, the research finds no evidence that social casino games are converting people to real money gamblers or causing problem gambling. The report concludes that social games are played for different reasons to gambling such as social interaction and relationship building across social networks. The consumer data also indicates that consumers are able to distinguish and understand the difference between social games and real money gaming.

The academic report, entitled “A New Industry’s Profile – Digital + Social + Game = Diģsogames” was undertaken by Harvest Strategy, a research group composed of academics from the University of Sydney and peer reviewed by academics from the London Business School. It is available here.

 

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