The Market for Browser and Social Network Games: Table of Contents

Transcription

1 DFC Intelligence DFC Intelligence Phone High Bluff Drive Fax Suite San Diego, CA The Market for Browser and Social Network Games: Table of Contents March 2012

2 Conditions of Purchase Purchase of this multi-client study is on a nonexclusive basis. This study has not been commissioned or contracted for by any one person or organization. The information contained is confidential to the purchaser, and the purchaser agrees not to circulate or loan the study in whole or in part to: their subsidiaries or divisions, industry trade associations (if not the purchaser), the general public, the media, nor other parties not belonging to their company, agency or organization. Unauthorized reproduction and dissemination which is discovered by DFC Intelligence (the publisher) shall constitute grounds for legal prosecution and damages under U. S. copyright law. DFC Intelligence has made every attempt to verify the accuracy and completeness of information in this study from sources we believe to be reliable. It is understood, however, that our estimates, forecasts, opinions and recommendations represent the judgment of our analysts, based on the best information available at the time of publication. It is recommended that purchasers also consult other available business sources and not rely solely on this analysis as the basis for major strategic, financial, or management decisions. DFC Intelligence makes no warranty or representation, either expressed or implied, with respect to the information in this report. In no event will DFC Intelligence be liable for direct, indirect or consequential damages resulting from any defect or inaccuracy in this report, even if advised of the possibility of such damages. Information about specific companies is not intended to be a complete description, nor of their securities, nor is this study an offer to buy or sell such securities. DFC Intelligence s liability, if any, shall not exceed the amount paid for this study DFC Intelligence, a California Corporation. All rights reserved. No part of this report may be sold, reproduced, or transmitted in any form or by any means, including photocopying, recording, or by any information storage and retrieval system, without the written permission of DFC Intelligence. This report is for individual use only. Redistribution requires a site license.

3 About This Report In the ever-changing gaming industry, it is a daunting task to properly define and analyze a market segment in the gaming industry. Especially in the relatively new free-to-play (F2P) segments everything is constantly changing and evolving. In an attempt to achieve such a goal, DFC Intelligence narrows down the research scope as specific as possible even though sometimes it may seems arbitrary. This report looks at a specific segment of the PC online gaming market: products developed for play online within a browser or social network. The main feature of these products is they are easy to access and can be played without the end user needing a high performance system or to download a large client. Other DFC Intelligence reports look at other segments of the online game market, including freeto-play client games, subscription MMOGs, console games and mobile games. The DFC Online Game Market Forecasts and Worldwide Game Market Forecasts aggregate these segments into combined worldwide forecasts including forecasts by individual region and country. This report, co-written by DFC with noted industry veteran and executive Jess Mulligan, covers primarily online games that meet the following criteria: 1) are playable in a browser or social network, 2) allow a user initially to play for free with optional microtransaction-based in-game item purchase and/or subscription for premium content, 3) run on a PC platform, and 4) have no large client. (See the Definition section for detailed explanations.) Popular games that fall into the category include games played on Facebook, such as products from Zynga; games from companies that aren t dependent on social networks, such as Bigpoint in Germany, and; some large virtual worlds such as Club Penguin, Habbo Hotel and Runescape. In this report, we first define and discuss the browser-based and social network business. There is then a discussion of business models for multiple types of games. This includes a look at issues such as marketing and the difference between a game delivered in an independent browser versus one delivered in an application or social network such as Facebook. Five-year forecasts for the segment are provided and there is also a look at some of the top companies and products. San Diego, CA March 2012 David Cole, Founder and Analyst, DFC Intelligence dcole@dfcint.com Web: Jess Mulligan jessica.mulligan@gmail.com LinkedIn:

4 Table of Contents INDEX OF TABLES... 6 I. EXECUTIVE SUMMARY... 9 II. MARKET OVERVIEW AND HISTORY A. OVERVIEW B. DEFINING BROWSER AND SOCIAL NETWORK GAMES C. DEFINITIONS D. HISTORY E. THE KEY DIFFERENCES BETWEEN BROWSER AND SOCIAL NETWORK GAMES AND OTHER ONLINE GAMES Lower Development Costs Faster Development Cycles Easier to Add or Change Content and Features Accessibility Social Network Games: A More Casual Audience Means a Larger Market III. CURRENT ISSUES AND TRENDS A. WHERE THINGS STAND TODAY The Man quisition Roll-Up Strategy The Start of Decline in Active Users or MAUs and DAUs B. LONGER DEVELOPMENT CYCLES AND HIGHER DEVELOPMENT COSTS C. MORE POACHING IN NON-BRAND NAME PRODUCTS D. REVENUE TRENDS TO TODAY IV. LOOKING FORWARD A. ISSUES AND SOLUTIONS B. KEY ISSUE #1: HOW TO GET MORE REVENUE PER PLAYER? More Flogging the Data C. KEY ISSUE #2: HOW TO CONVERT MORE PLAYERS INTO PAYERS? Design Issues Differentiating Products What Features and Content Will Attract More Players? D. LAUNCHING IN MORE LANGUAGES/TERRITORIES Cultural Localization Payment Processing Comparing Europe and the US The Ease of Facebook Credits Marketing and Distribution: The Rising Cost of Customer Acquisition Word of Mouth as Guerilla Marketing E. EXPANDED DISTRIBUTION Territory Expansion Moving Away from Facebook Is Mobile Really Viable? F. MORE BRAND NAMES IN THE SPACE G. MORE AND BETTER MARKETING... 63

5 V. BUSINESS MODELS A. OVERVIEW B. REVENUE SIDE ANALYSIS Revenue Model 1: A Modest Success Scenario for a Browser F2P with a Pure Virtual Item Model Revenue Model 2: Solid Hit Browser F2P with Pure Virtual Item Model Revenue Model 3: Slow Build Big Hit Browser F2P/Optional Subscription Revenue Model 4: Massive Hit Browser F2P/Optional Subscription Revenue Model 5: Modest Hit Facebook Game Model Revenue Model 6: Massive Hit Facebook Game Model Revenue Model 7: Steady Hit Facebook Game Model Simple Revenue Business Models C. COST SIDE ANALYSIS Overview Development Cost Marketing and User Acquisition Cost Payment Methods and Financial Infrastructure Costs Ongoing Costs Browser and Social Network Game Cost Model One Browser and Social Network Game Cost Model Two Browser and Social Network Game Cost Model Three VI. MARKET SIZE AND FORECASTS A. NORTH AMERICA AND EUROPE GROWTH SCENARIOS B. WORLDWIDE FORECASTS FOR BROWSER AND SOCIAL NETWORK GAMES VII. COMPANY AND PRODUCT PROFILES A. BIGPOINT B. DISNEY: PLAYDOM AND CLUB PENGUIN C. ELECTRONIC ARTS, PLAYFISH AND POPCAP D. FACEBOOK E. FUNZIO F. GAMEFORGE G. JAGEX H. KABAM I. SULAKE CORPORATION J. WOOGA K. ZYNGA

6 Index of Tables Table 1 Worldwide PC Online Game Revenue: Table 2 Worldwide PC Online Game Sales by Region: Table 3 North America and Europe Browser and Social Network Games as Percent of Total PC Online Games: Table 4 Zynga Revenue: Table 5 Facebook Users: Table 6 Zynga Monthly Active Users: Table 7 : Comparison browser game dev time versus client/server MMO Table 8 Facebook Top Games: (in millions of MAU) Table 9 Top Facebook Game Publishers: March Table 10 Projected Development Costs for Browser and Social Network Games: Table 11 Browser and Client/Server MMO Development Cost Comparisons: Table 12 Western Europe PC Online Game Revenue by Country: Table 13 Average 2010 Transaction Size by Country (Europe) Table 14 Modest Success Scenario for a Browser F2P with a Pure Virtual Item Model Table 15 Five Year Cumulative Revenue for Modest Success Scenario for a Browser F2P with a Pure Virtual Item Model Table 16 Solid Hit Scenario for a Browser F2P with a Pure Virtual Item Model Table 17 Five Year Cumulative Revenue for Solid Hit Scenario for a Browser F2P with a Pure Virtual Item Model Table 18 Slow Build Big-Hit Scenario for a Browser F2P with an Optional Subscription Table 19 Five Year Cumulative Revenue for Slow Build Big Hit Scenario F2P with Optional Subscription Table 20 Massive Hit Scenario for a Browser F2P with an Optional Subscription Table 21 Five Year Cumulative Revenue for Massive Hit Scenario a Browser F2P with an Optional Subscription Table 22 Modest Hit Scenario for a Facebook Game Table 23 Three Year Cumulative Revenue for Modest Hit Facebook Game Table 24 Facebook Modest Hit Scenario Monthly Active Users First 18 Months Table 25 Massive Hit Scenario for a Facebook Game Table 26 Three Year Cumulative Revenue for Massive Hit Facebook Game Table 27 Facebook Massive Hit Scenario Monthly Active Users First 18 Months Table 28 Steady Hit Scenario for a Facebook Game Table 29 Five Year Cumulative Revenue for Steady Hit Facebook Game Table 30 Facebook Steady Hit Scenario Monthly Active Users First Three Years Table 31 Basic Revenue Model at 2% Conversion Rate Table 32 Basic Revenue Model at 5% Conversion Rate Table 33 Basic Revenue Model at 10% Conversion Rate Table 34 Basic Revenue Model at 15% Conversion Rate Table 35 Standard Transaction Fee Comparison between U.S. and Korea Table 36 Low Cost Browser or Social Network Customer Acquisition Cost Model Table 37 Low Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 1% Conversion Rate Table 38 Low Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 2% Conversion Rate

7 Table 39 Low Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 3% Conversion Rate Table 40 Moderate Cost Browser or Social Network Customer Acquisition Cost Model Table 41 Moderate Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 1% Conversion Rate Table 42 Moderate Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 2% Conversion Rate Table 43 Moderate Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 3% Conversion Rate Table 44 High Cost Browser or Social Network Customer Acquisition Cost Model Table 45 High Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 1% Conversion Rate Table 46 High Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 2% Conversion Rate Table 47 High Cost Browser or Social Network Customer First-Year Profit/Loss Analysis at 3% Conversion Rate Table 48 North America and Europe Growth Scenario 1 for Browser and Social Network Games Table 49 North America and Europe Growth Scenario 2 for Browser and Social Network Games Table 50 North America and Europe Growth Scenario 3 for Browser and Social Network Games Table 51 North America and Europe Growth Scenario 4 for Browser and Social Network Games Table 52 North America and Europe Growth Scenario 5 for Browser and Social Network Games Table 53 Worldwide Browser Game Forecasts by Region: Table 54 Worldwide Social Network Game Forecasts by Region: Table 55 North America Forecasts for Browser and Social Network Games: Table 56 Europe Forecasts for Browser and Social Network Games: Table 57 Rest of World Forecasts for Browser and Social Network Games: Table 58 Worldwide Forecasts for Browser and Social Network Games: Table 59 Bigpoint Key Facts Table 60 Registered Users for Key Bigpoint Browser Games: Table 61 Playdom Key Facts Table 62 Playdom MySpace Monthly Users by Title: March Table 63 Playdom Facebook and MySpace Users October Table 64 Playdom Facebook MAU by Game: March Table 65 Club Penguin Key Facts Table 66 Top Electronic Arts Facebook Games: March Table 67 Facebook Revenue by Type: Table 68 Facebook Users by Region: Table 69 Facebook North America Users: Table 70 Facebook Europe Users: Table 71 Facebook Asia Users: Table 72 Facebook Rest of World Users: Table 73 Funzio Key Facts Table 74 Gameforge Key Facts Table 75 Gameforge Browser Games: Table 76 Jagex Key Facts Table 77 Kabam Key Facts

8 Table 78 Sulake Key Facts Table 79 Sulake Revenue: Table 80 Wooga Facebook Monthly Active Users: Table 81 Key Zynga Facts Table 82 Zynga Revenue and Income: Table 83 Zynga Expenses: Table 84 Zynga Daily Active Users: Table 85 Zynga Monthly Active Users: Table 86 Zynga Monthly Unique Users: Table 87 Zynga Monthly Unique Payers Table 88 Zynga Revenue Per Monthly Active User Table 89 Zynga Revenue Per Monthly Unique User Table 90 Zynga Revenue Per Monthly Unique Payer