SuperData Research Inc. estimates that the social gaming market will reach $8.6 billion in worldwide revenues by 2014. Despite Facebook's dominance, the bulk of that revenue – $5.6 billion – will come from non-Facebook networks. With revenue driven by prepaid game cards used by social gamers to enhance in-game experiences, companies that partner with game developers and social media sites can grow prepaid card footprints internationally.
Dr. Joost van Dreunen, SuperData Lead Analyst and Managing Director, named three components important for a successful game card implementation: social game content, marketing and a growth audience. "I think by providing a worldwide brand, or setting up an infrastructure in that sense, emerging markets can be very valuable to the U.S. companies that provide that service," van Dreunen said.
A key ingredient is that prepaid card providers partner with game developers and social networks that have large audience bases. "To win those contracts, I guess you would have to grow with a company like that," van Dreunen added. "And that's a little bit of a gamble. And it takes expertise to sort of see, well, what's going to do well in the next six months? The next 12 months?"
In a white paper entitled Beyond Facebook, SuperData highlighted popular social networks in emerging markets, including Hyves (The Netherlands), Tuenti (Spain) and VKontakte (Russia). In Latin America, SuperData focused on social network Quepasa Corp. and social game distributors Vostu and Mentez.
In Brazil, Mentez distributes prepaid cards via a version of the U.S. feet on the street. "They have street teams," van Dreunen said. "They send 20 guys out every day to sell the cards at bodegas and small shops, Internet cafes, everywhere." Chain store distribution, the preferred method in the United States, is not as advanced in Latin America, he noted.
What Mentez has perfected is saturating the Brazilian market with cards, according to van Dreunen. "You have a big market share and then you just push out the cards," he said. "What that means practically is that you have to close the loop between the person making and publishing the game and the person paying and playing the game." Internet cafes are popular in places like Latin America and Asia because individuals in those regions often don't own personal computers to allow them to connect to the Internet. In South Korea and China, "PC bangs" have sprouted up. These centers allow patrons to play online games for a small hourly fee.
According to Beyond Facebook, the Asia region generates the most social gaming revenues (40 percent), followed by North America (28 percent), Europe (23 percent) and Latin America (5 percent). To arrive at these percentages, SuperData sampled 774,158 unique transactions on social networking sites made by over 150,000 individuals over a six month period. With this data, the New York-based research firm calculated the average revenue per paying user (ARPPU).
In Central America, the ARPPU is about $7.31, while in South America it hovers around $6.08. The report said the ARPPU is greater in developed markets than in emerging markets, which only reinforces the opportunity to convert social media users into paying customers.
"Traffic [on social websites] is not the issue in Latin America," van Dreunen said. "It's monetization. How do I get these people to spend some money?... So, people start off first being indirect payers [via opt-in marketing incentive offers]. How many convert to paying players? And I think that that's where there's a lot of room for growth still left."
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.Prev Next