TriplePoint PR

Inside Network recently released a report that the virtual goods market is expected to drive $1.6 billion in revenue in the U.S. in 2010. The market is driven in large part by virtual items sold in social games, which account for $835 million of the total sales projected. While publishers such as Zynga, Playfish, Playdom and Serious Business are hard at work creating the content and engagement mechanisms to drive sales, payments solutions such as Social Gold (online), Zong (mobile), Open Network Entertainment, Inc. (prepaid cards) and the newly launched Kwedit (cash) are striving to help customers purchase those virtual goods seamlessly.

June NPD data showed the game industry’s sharpest decline since 2000, with overall sales dropping 31% from this same time in 2008. The sales decline contrasts sharply with the fact that 4 million new gamers have entered the industry in the past year. The rise in audience size alongside a sharp drop in sales signals an emerging trend that players are increasingly turning to affordable digital content, free-to-play online game portals and casual games for interactive entertainment.

With Gamestop openly stating that their margins are being buffered by used game sales, protecting them from the sharp decline, one has to wonder if the sales slump is a temporary trend, or a permanent change. GameStop’s stranglehold on the used game market has caused many publishers and developers to explore alternative distribution outlets via online distribution platforms and console based marketplaces, and thus the quality of digital content has increased monumentally over the past year.

Last week, we joined YPulse’s Youth Marketing Mashup 2-day conference in San Francisco. A wealth of market research, success stories, intriguing discussions and even heated debates, the conference was highly informative and entertaining.

The conference kicked off with a vibrant keynote speech by self-proclaimed “Advice Slinger” Josh Shipp (HeyJosh.com). Shipp shared insight into his experience as a motivational speaker for youth audiences – an extremely challenging and also deeply rewarding profession. He advised the audience of marketers, brand managers and advertisers on tactics that enable him to connect with the teen audience. Shipp emphasized the importance of telling stories through campaigns and remembering to ask yourself while developing the campaign “Does your brand have a story worth telling?” If the story is worth telling, teens will tell your story to their friends and family, and the story (i.e. your marketing campaign) will grow virally.

In-Stat reported today that online gaming subscriptions will grow a projected 20.4% between 2005 and 2013, while unit sales of video game consoles will decline in 2010.  Recent research by In-Stat found the following:

• Each of the three key vendors [Microsoft, Sony and Nintendo] is positioned to generate hundreds of millions of dollars in annual online gaming revenue from online service subscriptions, download revenue and/or online advertising.
• Microsoft’s Xbox Live service will clearly lead, with projected revenue of over $1 billion in revenue annually by 2013.  
• Worldwide broadband subscriptions will reach 562 million in 2009.  The combination of broadband, installed home networks, and pervasive Wi-Fi in gaming devices, is fueling online gaming subscriber growth.
• In 2008, total video game console unit shipments reached 88 million worldwide, up 7% from worldwide unit shipments in 2007.

References:
In-Stat Press Release
Game Daily Article

Gamastura reported today that Pearl Research’s new “Games Market in China” report forecasts the online games market in China will exceed $5.5 billion in 2012. The market grew more than 63% to reach $2.8 billion in 2008. According to Pearl Research:

Many Chinese game operators continue to be optimistic in 2009, stating that the worldwide economic downturn has had little effect on their business. Games constitute a small-ticket item and users have not cut back as much on this type of discretionary spending.

Industry analysts Screen Digest announced today that subscription-based massively mulitplayer online games revenue grew by 22% in 2008 and reached consumer spending levels of $1.4 billion in North America and Europe. The premium subscription-based model, often used to generate revenue in “free-to-play” games, showed significant growth of 11%. According to Screen Digest:

• Consumer spending growth on non-World of Warcraft subscription MMOs grew at a robust 27% in 2008.
• By 2013, the subscription market will top $2 billion in consumer spending.
• Much of 2008′s growth has come from games that employ premium subscription models, which rely on freely “distributed, downloaded and accessed games” where “players are encouraged to sign up to a subscription to access premium content”.
• Consumer spending on premium subscriptions grew by 11% year-on-year, from 35% to 46%.

NPD Group released its report Online Gaming 2009, which shows significant growth in online gaming.  According to the report:

• Online activites for consoles and portables increase from 19% in 2008 to 25% in 2009. PCs showed a slight decline, but is still the dominant online gaming platform.
• Xbox 360 is the leader with 50%, with Nintendo Wii increasing from 18% in 2008 to 29% in 2009.
• Xbox 360 and PS3 owners download more content than owners of other systems, although downloading has slowed compared to 2009.

eMarketer reported today that ad-supported game sites, or commonly known as casual gaming sites, saw “27% more unique visits and 42% more total playing time in December 2008 than in December 2007.”  According to Paul Verna, eMarketer senior analyst:

“comScore’s measurements highlight the ongoing shift from high-cost, console-based gaming toward free, browser-based alternatives. This trend has been underway for some time, but the economic crisis has accelerated it. Given current economic and consumer behavior patterns, we expect to see ad-supported, casual games continue on an upward trajectory in 2009.” 

Some of the sites highlighted included Yahoo! Games, WildTangent Network, and TriplePoint client Spil Games.