DFC forecasts social games to reach $7.5 billion in revenue by 2016

DFC Intelligence believes games on social networks will continue to grow on the back of virtual goods sales

According to a new report by DFC Intelligence, the market for free-to-play titles on social networks and browsers is estimated to grow from $3.2 billion last year to $7.5 billion in 2016. DFC points to virtual goods sales as a larger driver of that revenue, but stresses that developing a strong community with access to a wide variety of games is key to success.

"While the global F2P market is quite diverse, Zynga and Facebook have dominated the market in the U.S.," says David Cole, founder and President of DFC Intelligence. "Despite major investments in the browser and social network games space from companies such as Electronic Arts and the Walt Disney Company, Zynga has only increased its dominance of the Facebook game market in the past year."

Opportunities are strong in the market for publishers looking to move away from Facebook and create their own networks for players.

"Outside the U.S., the market for games on just Facebook has not yet reached saturation and there are some major growth opportunities," said Cole. "However, clearly one of the biggest opportunities is reaching users in other social networks and companies creating their own network, as Zynga is looking to do with the Zynga Platform."

The report does caution some developers and publishers looking for long-term success in social games, as the market has become crowded with "copycat" games, leading to consumer fatigue.

"Browser and social network games are targeting an audience that, by and large, does not pay for the product," said Cole. "The fact that many of these free products show a rapid drop off in usage shortly after release is a concerning trend."

"Browser and social network game publishers have been offering many 'me, too' products and players are trying them and leaving them faster. To increase retention rates among paying players, especially on social networks, publishers need to offer something different and that means development budgets are going to rise," added consultant Jess Mulligan.

The full report is 180 pages and is entitled The Market for Browser and Social Network Games.

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