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Casual Games Worth $2.25B — But Where Are They Going?

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[qi:027] For anyone out there who remains unconvinced as to how important the casual gaming market is, the latest report by the Casual Games Association may help change your mind. The casual games industry rakes in $2.25 billion a year, according to the org’s latest research, with growth estimated at a whopping 20 percent.

As the report outlines, over 200 million people play casual games on the Internet each month. And it’s the only sector of gaming that reflects an appropriate gender balance: The ratio of men to women is nearly even, at 48.3 percent to 51.7 percent, respectively, yet 74 percent of people who pay to play casual games are women. In other words, casual gaming is an area of enormous potential for the gaming industry…if only the industry can avoid some potential pitfalls along the way.

Don’t mistake potential for actual money on the table. Chris Morrison over at VentureBeat does a good job separating the two by comparing the scope of casual gamers to enthusiasts (a market that rings up $20 billion a year in revenues). Nine million accounts on World of Warcraft and six million accounts on Xbox Live are, after all, small potatoes compared to the 200 million suggested in this report, but at least Blizzard and Microsoft (MSFT) can count on predictable revenue from every one of their subscribers. And don’t forget, too, that the most popular online hardcore game may still be Counter-Strike, which last year averaged 200,000 simultaneous players at any given moment on Valve’s game delivery service, Steam.

It’s also good to keep in mind that the money generated from casual gaming doesn’t always go directly to a developer or publisher. Solitaire, which according to the report is the most popular casual game, is a free application that only indirectly profits Microsoft. Casual games are still making baby steps towards acquiring a captive audience and drawing a steady stream of income from it. There are still a lot of unhatched eggs out there.

Furthermore — and this is an issue of taxonomy endemic to reports like this — what exactly is “casual gaming”? It’s odd that casual gaming gets its own special category when, in fact, it’s a behavior pattern than reflects the way most people play games. Most people play even “hardcore” games casually — 20 minutes at a time, for example, or as a way to relax and socialize with friends. Do we speak of “casual film-goers” or “casual sports fans”? Is casual a genre — or an approach?

The moniker seems to betray a little bit of contempt; and when I attended a panel at >play, the digital media conference at UC Berkeley last week, even the casual-focused panelists joked that casual games were “not just for old women.” Alice Taylor has a great take on this, by the way, in her post, “DUH: Men play casual games too.”

But casual isn’t winning across the board — at least, not yet. The panelists in the talk also warned that without truly compelling new software this holiday season, the Wii stands to lose some of its luster and risks winding up as “a short-term win” rather than a true agent of disruption. We need something with which to update Wii Sports.

Games could see a PR backlash, too, with the increase in casual MMOs for children, which is challenging sometimes reluctant parents to pay up for subscriptions or virtual items, while at the same time drawing criticism from some sectors as being too consumerist. Club Penguin is only the latest hot player in a group that includes heavy hitters like Mattel and its Barbie property, as well as Sanrio’s virtual world, populated by Hello Kitty and friends, which is currently under development.

Finally, with all this talk of the importance of social media and the social environment enabled by web 2.0 technologies, we have yet to see a true convergence of the casual games space with online social spaces. Sure, sites like Kongregate have a social aspect — but only in the portal framework. Where are the casual MMOs that take advantage of all that the best of social networking has to offer, from Facebook to Flickr to Twitter?

The 20 percent growth rate is certainly exciting. How long such a trajectory can be sustained, however, depends on how well the casual gaming industry can respond to the challenges of a changing marketplace — and how successfully it can keep developing content that inspires the gaming community.

23 Responses to “Casual Games Worth $2.25B — But Where Are They Going?”

  1. In addition to Steve Kane’s comment, the relaunched is working to implement social networking features in the coming months. As an avid user since 2001, I love their relaunched 2.0 site- i also noticed that they’re giving away money and prizes more frequently.

  2. Steve Kane

    Not sure why you overlook the humungous clear market leader and winner: incorporates all sorts of excellent social networking tools and resources and has for years now.

    Also, their sub-site has for years blazed the trail with its innovative and successful subscription business model

  3. @ Yuval: It will be interesting to see what the Oberon-Myspace deal yields but given that Oberon’s core business if effectively aggregation of other people’s games, I have to imagine that there won’t be much cross-pollination of social and gaming in their implementation. We’ll see. But, to be honest, my money is on the open APIs coming from Facebook, Google, and the yet-to-launch casual MMO crowd.

  4. Habib Khan

    Oh my a gaming post on GigaOm that actually is incisive.

    Oh new poster.

    The lovely thing about casual games is that a lot of them can run in windowed mode thus allowing advertising and casual gaming to be the ultimate unholy duopoly.

  5. Sure, hard-core gamers can play in 20 minute snippets, after spending hours and hours learning how to play a first-person shooter! The distinction in casual games isn’t playing in short snippets, it’s nearly instant learning.

  6. To the point of casual being a genre or approach. It’s not an approach.

    I see it as a large genre opposite to action games. Many people that like casual games find action games, like Halo, involve too much stress and joystick gymnastics. Casual games cover smaller genre’s such as cards, board, puzzle, and strategy. Like Kdice and Gpokr.

  7. Good post, Jane. I agree with a lot of your points. And I agree that Kongregate needs to do a better job of bringing the social aspect into the games themselves – we’ll be putting a lot of attention on that in our upcoming premium games. Many of these will feature co-op multiplayer missions and quests.