Social gaming's surprising cash cows

The article, at http://money.cnn.com/...">http://money.cnn.com/2010/09/24/technology/social_gaming/index.htm?secti... (WARNING: There is a video game screen shot), says:

Quote:The stereotypical "gamer" is a teenage boy locked in his basement, playing World of Warcraft with a cube of Mountain Dew at his side. But games on social networks like Facebook have redefined the genre, and they're reaching previously untapped customers: Older women have become a key fan base.

They're logging onto sites like Facebook to play countless rounds of Zynga's FarmVille and CrowdStar's Happy Pets -- and game creators are racing to cash in.

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A whopping 35% of those who play social games say they have never played any type of digital game before, according to an August report from research firm NPD Group. That's almost 20 million Americans who are new to the pastime.

A January study from Information Solutions Group, conducting research on behalf of Bejeweled publisher PopCap Games, looked at American and British social gamers. The average player? A 43-year-old woman.

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"These games tap into a nurturing aspect, and players receive small positive encouragements," Jacobsson says. "It's like Pavlov's dog -- if you get rewarded, you want to keep going."

Keith Rabois, executive vice president of strategy at app maker Slide, was surprised when his company's 2009 game SuperPoke! Pets found a big fan base among older women. But that audience turned out to be a lucrative one: SuperPoke! is free to download, but some decorations and virtual gifts are for sale.

"People want to look witty and cool on Facebook, even if it costs a little money," Rabois told CNNMoney last month, shortly before Slide was acquired by Google. "We give them the tools to do that."

Cashing in on Mom: Playfish, a developer that Electronic Arts (EA) acquired in 2009, has seen such a swarm of older players that the company is planning to digitize long-loved games like Monopoly to cater specifically to that demographic.

Older gamers tend to be the ones with money to spend -- and that makes them a prime target for game creators.

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Users willing to pay for social games are few and far between: Atul Bagga, an analyst at research firm Think Equity, estimates only about 1% to 3% of social gamers actually shell out cash.

That's in line with estimates from Zynga, the industry's current Goliath. The company finds that 3% to 5% of players are potential moneymakers, Zynga chief game designer Brian Reynolds said at an industry conference earlier this year.

But it's still early days for social gaming business models, and since most of the game makers are privately held, there's a fair bit of guesswork in analyzing the industry's revenue streams.

Even the companies themselves struggle with it. Alex St. John, a WildTangent founder and current president of gaming company hi5, has his doubts about the older-gamer trend.

"Children don't have their own credit cards -- of course they're using Mom's," St. John scoffs. "Companies are looking at the credit card data instead of who's actually playing the game. It's not an accurate metric."

Even if Alex St. John is correct and the number of older women playing is not as high as believed, I nonetheless am still concerned about these new games' potential to bring in players from this demographic. Although the current set of social games are apparently not as addictive as other types of games (despite references like to Pavlov's dogs in the article), especially the MMORPG's, the developers will likely keep trying to "improve" them. To the developers, this means to get more people to play these social games, to play the games more devotedly, and to spend more money to play them. In the future, we may unfortunately start getting larger groups of older women coming here with addictions to "social" games, similar to the recent increase that I have noticed of players from Second Life.