What business to start in 2012: Social gaming
With Facebook users now spending a billion hours a month playing games on the social network, it’s easy to see why this sector is such big business
Why is it so promising?
If you can slash through the crowd and carve your own niche in social gaming, the rewards are endless. Zynga, creator of the popular game Farmville, was recently valued at $1bn, and it isn't the only success story. For example UK firm Playfish, founded in 2007, has recently been snapped up by gaming giants EA for $400m after creating two popular Facebook games.
With Facebook devotees now spending a billion hours a month playing games on the social network, and the site expecting to hit one billion users by August 2012, it's easy to see why this sector is such big business. The social, collaborative aspect of social gaming lends itself to viral growth, enabling popular games to grow exponentially and realise huge returns for their developers.
Big brands are using social games as a marketing tool through techniques such as in-app ads, and “gamification”, which enables brands to promote their products directly through the games.
According to research carried out by Enders Analysis in November 2011, the UK social gaming market will be worth around £400m by 2015, which explains why there is considerable interest from the investment market. Over two-thirds of all Britain's internet users can be classed as ‘casual gamers' so the potential audience is huge.
What are the specific opportunities?
Traditional games involving puzzles, battles or challenges remain popular, as Ella Romanos, managing director of interactive production and game development company Remode, says:
“In terms of social and network gaming, there'll be a lot of opportunities in terms of free-to-play. A lot of the games tend to copy each other and target a certain demographic, and there's plenty of opportunity to reach new people. There's much more potential now playing in real-time with your friends.”
However, while the potential rewards are vast, you'll have a tough job breaking into this market. The shadow of Zynga looms large over anyone trying to compete with it, and each month brings a flood of Chinese, Japanese and Korean start-ups, all capable of producing low-cost, high-quality games.
Another option is social betting, allowing people to bet on live events against their friends, and banter with each other as the spectacle unfolds. The competitive-yet-friendly aspect of betting dovetails perfectly with social networking, and it seems people are happy to part with real money to enhance the gaming experience. According to a study published by PopCap Games last November, over 30 million people have bought virtual currency on social games, using real tender.
A number of social betting pioneers are seeing huge success. For example, German internet start-up Crowdpark has enticed over 500,000 people to its Facebook-only gambling game, Bet Tycoon, in just nine months; meanwhile Betable, a company which describes itself as “Twitter for betting”, has been thriving ever since completing an eye-catching $3m funding round in summer 2010.
There's no real limit to the amount of events, spectacles and competitions you can include in your betting platform; indeed Betable's USP is that users can bet on absolutely anything. In addition to staples such as football, darts and racing, you could include TV shows such as Strictly Come Dancing and The X Factor – tapping into the ever-growing army of women now playing social games. Smarkets, Passoker, and Picklive are other recent entrants and PlayON has just gone live, so there's still much to play for.
“With Facebook users now spending a billion hours a month playing games on the social network… it's easy to see why this sector is such big business”
Who's doing it?
Dave Nevison, co-founder of Bodugi.com
“Bodugi started because I've been in the betting game as a punter for years, I used to work as a professional gambler, and I wanted to tie in my traditional betting and bookmaking knowledge with the social media experience of my kids. It could give betting firms a new relationship with their clients. All our punters can chat among themselves, and some people aren't even aware that there's a bookmaker involved.
“We launched Bodugi in March 2011. It's a stand-alone site, but we're integrated with other social media channels – you can click on the Facebook or Twitter icon and post a link specific to your gaming group to your feed. There's a chatroom on our site, which allows you to have in-play banter with your mates, and on certain games we have a live leaderboard, which updates as the game progresses.
“We've already got 8,500 people signed up, and we're hoping to secure an investment from a strategic partner within our space, which should enable us to accelerate our growth.”