Social Gaming vs. Traditional Gaming

Source: Google Images"Zynga Game Network Inc.'s estimated worth surpassed Electronic Arts Inc.'s stock-market value, a sign of the ascendance of social-networking entertainment at the expense of traditional video games."(Bloomberg).

This was the opening sentence of recent Bloomberg Businessweek article about the rise of the social gaming giant Zynga. It is a very well written article and contains a valuable amount of insight about the social gaming industry, I highly recommend reading it. For the purposes of this post however, I would like to analyze the differences between social gaming and traditional gaming from a marketing perspective. Here are my three main thinking points:

1. Social games are free ... but wait, Zygna is bigger than EA.. what? Zynga makes money by selling virtual goods and advertising.. not by selling games. I think this tips the model of traditional games on its head because it is almost as though you are not focused on selling the main product.. you are focused on selling Source: Google Imagesthe accessories. From a marketing point of view, Zynga has managed to blend the virtual gaming world with reality by selling "virtual goods" cards (pre-paid game credits) in physical stores (such as 7-Eleven, Target and even Wal-Mart). This is simply fascinating to me because it shows how well Zynga has managed to understand the behaviours of its target market. Selling a physical card to buy virtual goods is a model that has worked very well for companies like Apple with their iTunes card. If you think of how successful Apple has been with iTunes... compare the two models: iTunes is free but you pay for the songs... Farmville is free but you pay for 'Farm Cash'.

2. The principle of invitation - For those of you with Facebook accounts, I am sure you are very familiar with invitations to play 'Mafia Wars' or 'FarmVille.' If a very good friend of yours invites you to play Mafia Wars Source: Google Imageswith him or her on Facebook, it doesn't take a lot of effort on your part to simply accept the invitation. It's free. However, if a friend invites you over to play a new game on his or her X-Box/PS3/Wii... you have to drive/walk over there and if you do end up liking the game then you may end up having to buy it yourself. This isn't free. The fundamental difference between these two models is the ease with which the message can spread. From a viral marketing point of view, the unique idea of invitation offered by social games make them easily suited for quick dispersion over an audience. This may explain why FarmVille has over 210 million active monthly users.

3. The tale of two markets - According to a fascinating study conducted by Mashable: the average FarmVille player is a 43-year-old woman. However, the average age of a 'gamer' according to the Entertainment Software Association (ESA) is 34 with a 60% chance of being male. How exactly are marketers utilizing these facts? Can the rise of Zynga be attributed to a change in the demographic of the typical 'gamer'? From a marketing perspective, I think we will soon see some fundamental changes to the ways in which games are marketed simply because of this demographic difference. It will certainly be interesting to watch.

Final thought: All of the facts point toward the need for us to pay close attention to the rise of social gaming because it is force that is going to disrupt the entire traditional gaming industry.