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Summary:

By the end of 2010, about 50 percent of all Facebook monthly active users were gamers. But that fell to about 25 percent in 2011, as Facebook aggressively added new users. The result is that game makers need to work harder to find and retain users.

farmville

It’s not just Facebook commerce, or F-commerce as some like to call it, that is languishing at the world’s largest social network. With its IPO on the horizon, there’s reason to start worrying about Facebook’s gaming revenues, according to new research from IHS iSuppli.

Facebook’s problems in the gaming market are quickly summed up by the research firm:

“Facebook’s days as a boomtown for game operators appear to have come to an end, with the total number of users stagnating amid rising barriers to entry, increasing competition and an intensifying fight for consumer mindshare with other social networking activities.”

IHS iSuppli notes that by the end of 2010, about 50 percent of all Facebook monthly active users were also gamers. But while Facebook aggressively added new users in 2011, the absolute number of gamers more or less remained unchanged. Meanwhile, the percentage that were visiting games fell to about 25 percent.

That’s bad news not just for Facebook, but also for Zynga, its largest partner in the casual gaming space. The number of monthly active users for Zynga declined to 225 million in the fourth quarter, from 266 million in the previous quarter, according to IHS iSuppli.

So what’s driving the decline in gaming? The research firm posits that more difficult customer acquisition, increased competition and Facebook’s attempt to be everything to everyone is forcing gaming companies to work harder to capture new users and to keep them engaged.

On the customer acquisition side, IHS iSuppli says that viral channels — which had helped game makers connect with users over the last few years — aren’t as effective as before, forcing Zynga and others to do more cross-promotion between games and spend more on direct advertising. There’s also more gaming and other entertainment options on Facebook, meaning more game makers are competing for a shrinking amount of users’ time.

Finally, as Facebook has grown, it’s opened the doors for even more types of content being shared in users’ news feeds and on their Timeline pages. The addition of new seamless sharing apps means it’s not just Farmville updates that show up when you login or look at a user’s activity. Considering the percentage of users that are gamers has also declined, those apps are getting much less visibility on Facebook than they had just a few years ago.

  1. Reblogged this on Dots Of Color.

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  2. Maybe Facebook could entice us to discover these games in a fun way instead of forcing them down our throats. I receive on an average 1 to 2 game invitations a day. I don’t play games, don’t have the time and really don’t have any interest in playing online. It sounds like Facebook took a cue from Microsoft and is successfully turning us off its services. If only there was an easy way to stop these incessant uninteresting invitations.

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  3. Reblogged this on quickgamer88.

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  4. And then there’s the problem that tending a virtual farm is kind of dull. Regular farming seems more interesting.

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  5. No mention of ‘Facebook credits’? The mandatory Tax FB are forcing on game companies 30% of all revenues??

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  6. Joe McNotloggedin Wednesday, February 29, 2012

    I wish Facebook didn’t have so much spam from games.

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  7. I wish FB didn’t have so much spam from games.

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