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Social Network Gaming - US - November 2011

Based on Mintel’s consumer research about one in five adults played online games in the 30 days prior to their interviews in 2011, and according to Nielsen, an estimated 10% of time spent online is devoted to playing games—proof that online gaming is a source of entertainment for many adults. Yet only about one third of adults who play games on social networks or online sites spend money to play them. Advertising will continue to be an important revenue source for realizing the value of those who play for free, while an increase in the share of gamers who buy virtual goods or make other in-game purchases will prove critical for revenue growth going forward.

Facebook is the most popular social network gaming site. Yet despite enthusiasm about the power of social networks, the majority of adults who play games on social networks or online portals play alone most often. Changing this dynamic will be a critical component in the next phase of social game development. In this report, Mintel examines the growing social network/online portal gaming market, and answers the following questions:

  • What is the historical, current and forecast revenue for social/online games?
  • How are social/online games monetized? How does revenue from ads compare to revenue from in-game purchases?
  • Who are the leading developers and distributors?
  • What are the drivers of growth and where does social/online gaming fit in the overall gaming space (console, mobile or PC gaming)?
  • How do gamers learn about new games?
  • What are the demographics of social/online gamers and what are their gaming habits and attitudes?
  • How can social/online games be used as part of an overall branding strategy for consumer-facing brands entertainment, CPG companies, and retail brands that are not game publishers?
  • What are the future opportunities in game development, marketing and promotion?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Revenue exceeds $2 billion in 2011
                      • One in five adults plays social/online games
                        • Social games compete with other gaming and entertainment options
                          • Facebook leads; Google + and everyone else follow
                            • The Zynga effect
                              • Marketing wonderland
                                • More genres/ways to make games more social
                                  • Small percentage of gamers responsible for majority of revenue
                                    • Gamers ready for more transactional advertising
                                      • Majority of online gamers have diverse gaming interests
                                        • Social gamers not very social
                                          • Friends, a leading source of new game identification
                                            • Hispanics a promising market for SNS/online portal games
                                            • Insights and Opportunities

                                              • True cross-platform play
                                                • More platforms
                                                  • More revenue streams
                                                    • Men
                                                      • Figure 1: Weekly gameplay by platform, by gender and age, July 2011
                                                    • Avoiding Facebook Credits
                                                    • Inspire Insights

                                                        • Trend: Moral Brands
                                                          • Games that give
                                                            • Trend: Life Coaching
                                                              • Players that receive
                                                              • Market Size and Forecast

                                                                • Key points
                                                                  • Revenue doubles 2006-11
                                                                    • Figure 2: Total U.S. sales of online games, at current prices, 2006-15
                                                                    • Figure 3: Total U.S. sales of online games, at inflation-adjusted 2010 prices, 2006-15
                                                                • Market Drivers

                                                                  • Key points
                                                                    • Internet access and time spent online
                                                                      • Figure 4: Internet usage and average hours spent on PC, 2004-11
                                                                    • Majority of internet users on a social network
                                                                      • Figure 5: U.S. social network users and penetration, 2009-13
                                                                    • Online gameplay increasingly common and frequent
                                                                      • Figure 6: Online gameplay, January 2005-June 2011
                                                                    • Ad revenue still rising
                                                                      • The “mium” in freemium
                                                                        • Figure 7: Game purchases on portals or social networks in past month, by platform played, July 2011
                                                                    • Competitive Context

                                                                      • Key points
                                                                        • Competition for online time
                                                                          • Figure 8: U.S. leading online activities by share of internet time, 2009-11
                                                                        • Increasing competition from other platforms
                                                                            • Figure 9: Incidence of gameplay, by platform, July 2011
                                                                          • Mobile gaming
                                                                            • Figure 10: Total U.S. sales of mobile phone and tablet-based games, at current prices, 2005-15
                                                                          • Console gaming
                                                                            • Figure 11: Total U.S. sales to dealers of console games, at current prices, 2006-12
                                                                          • Competing for time with other digital pursuits
                                                                          • Gaming Sites

                                                                            • Key points
                                                                              • Facebook and everyone else
                                                                                • Portal market fragmented
                                                                                  • MMOGs in their own world
                                                                                    • Figure 12: Websites visited in the last week for gaming, July 2011
                                                                                  • Social networks
                                                                                    • Facebook
                                                                                      • Google+
                                                                                        • MySpace
                                                                                          • Online portals
                                                                                            • Electronic Arts (Pogo.com)
                                                                                              • Yahoo! Games
                                                                                                • Nickelodeon Games (AddictingGames)
                                                                                                  • MSN Games
                                                                                                    • AOL Games (Games.com)
                                                                                                      • Newgrounds
                                                                                                        • GameHouse
                                                                                                        • Leading Companies

                                                                                                          • Key points
                                                                                                            • Zynga exceeds 195 million MAU, EA’s The Sims Social an instant hit
                                                                                                              • Imitation the sincerest form of flattery
                                                                                                                • Figure 13: Leading game developers on Facebook, Oct. 17, 2011
                                                                                                              • Zynga
                                                                                                                • Electronic Arts (EA)
                                                                                                                  • Wooga
                                                                                                                    • Playdom
                                                                                                                      • King.com
                                                                                                                      • Innovations and Innovators

                                                                                                                        • Hardcore social games
                                                                                                                          • Raptr
                                                                                                                            • Prediculous
                                                                                                                              • Idle Engine
                                                                                                                              • Marketing Strategies

                                                                                                                                • Networks complete marketing ecosystems unto themselves
                                                                                                                                  • The gamer is the best promoter
                                                                                                                                    • Ads, the social network or portal, and reviews
                                                                                                                                      • Figure 14: Methods of finding new games to play, by platform played, July 2011
                                                                                                                                    • Designing social opportunities into the game
                                                                                                                                      • Games as marketing vehicles
                                                                                                                                      • Platforms and Frequency of Play

                                                                                                                                        • Key points
                                                                                                                                          • One third play social network games; three in 10 play online games
                                                                                                                                            • Figure 15: Incidence of gameplay, by platform, July 2011
                                                                                                                                          • When it comes to daily play, social networks lead
                                                                                                                                            • Figure 16: Frequency of gameplay, by platform, July 2011
                                                                                                                                          • Little gender disparity in social network/online gaming frequency
                                                                                                                                            • Figure 17: Weekly gameplay by platform, by gender, July 2011
                                                                                                                                          • Online portals retain their audience across age groups
                                                                                                                                            • Figure 18: Weekly gameplay by platform, by age, July 2011
                                                                                                                                        • Sites Used

                                                                                                                                          • Key points
                                                                                                                                            • Facebook most popular gaming site
                                                                                                                                              • Figure 19: Gaming sites visited in last week, by platform played, July 2011
                                                                                                                                            • Facebook attracts all; gender differences for online gaming portals
                                                                                                                                              • Figure 20: Gaming sites visited in last week, by gender, July 2011
                                                                                                                                            • Facebook games most popular with gamers aged 25-44
                                                                                                                                              • Figure 21: Websites visited to play games in the last week, by age, July 2011
                                                                                                                                          • Spending

                                                                                                                                            • Key points
                                                                                                                                              • One in four pay to play
                                                                                                                                                • Figure 22: Game purchases on portals or networks in past month, by platform, July 2011
                                                                                                                                              • Women play, men spend
                                                                                                                                                • Figure 23: Game purchases on a social network site in the past month, by gender, July 2011
                                                                                                                                              • Spending most prevalent among 25-34 year olds; least among 55+
                                                                                                                                                • Figure 24: Game purchases on a social network or portal in the past month, by age, July 2011
                                                                                                                                              • Higher-income adults somewhat more likely to spend on gaming
                                                                                                                                                • Figure 25: Game purchases on a social network site in the past month, by household income, July 2011
                                                                                                                                            • Ads, Advergames, and Product Placement

                                                                                                                                              • Key points
                                                                                                                                                • Ads noticed by a majority of adult gamers
                                                                                                                                                  • About one in six watch ads to earn virtual goods
                                                                                                                                                    • Men more likely to have played an advergame
                                                                                                                                                      • Figure 26: Social gamers’ attitudes to advertisements and advergaming, by gender, July 2011
                                                                                                                                                      • Figure 27: Attitudes to advertisements and advergaming, by age, July 2011
                                                                                                                                                    • Most players recall seeing brands
                                                                                                                                                      • Men more likely to appreciate product placement
                                                                                                                                                        • Figure 28: Social gamers’ attitudes toward product placement, by gender, July 2011
                                                                                                                                                    • Finding New Games

                                                                                                                                                      • Key points
                                                                                                                                                        • Most adults play more than two games in more than two genres
                                                                                                                                                          • Figure 29: Attitudes to finding new games, by platform played, July 2011
                                                                                                                                                        • Regardless of gender, most like a wide range of games/genres
                                                                                                                                                          • Figure 30: Attitudes to finding new games, by gender, July 2011
                                                                                                                                                        • Youngest adults try new games most frequently
                                                                                                                                                          • Figure 31: Attitudes to finding new games, by age, July 2011
                                                                                                                                                      • Multiplayer Gaming

                                                                                                                                                        • Key points
                                                                                                                                                          • Solo gaming most common
                                                                                                                                                            • Figure 32: Number of playing companions in online social gaming, July 2011
                                                                                                                                                          • Men more likely to play multiplayer games
                                                                                                                                                            • Figure 33: Number of playing companions in online social gaming, by gender, July 2011
                                                                                                                                                          • Older gamers less likely to play multiplayer games
                                                                                                                                                            • Figure 34: Number of playing companions in online social gaming, by age, July 2011
                                                                                                                                                            • Figure 35: Attitudes to playing with friends and discussing games with friends, by platform, July 2011
                                                                                                                                                          • Younger adults more social than older gamers
                                                                                                                                                            • Figure 36: Attitudes to playing with friends and discussing games with friends, by age, July 2011
                                                                                                                                                          • Friends critical in new game selection
                                                                                                                                                            • Figure 37: Methods of finding new games to play, by weekly gameplay by platform, July 2011
                                                                                                                                                            • Figure 38: Methods of finding new games to play, by weekly gameplay by platform, July 2011
                                                                                                                                                            • Figure 39: Methods of finding new games to play, by gender, July 2011
                                                                                                                                                          • Friends top source for new games regardless of age
                                                                                                                                                            • Figure 40: Methods of finding new games to play, by age, July 2011
                                                                                                                                                        • Interest in Advanced Features

                                                                                                                                                          • Key points
                                                                                                                                                            • About half of gamers would like to win real-world prizes
                                                                                                                                                              • Figure 41: Interest in graphics heavy online gaming and real world prizes, by platform played, July 2011
                                                                                                                                                            • Men more keen on intensive graphics
                                                                                                                                                              • Figure 42: Interest in graphics heavy online gaming and real world prizes, by gender, July 2011
                                                                                                                                                            • Prizes desired by all but the oldest; graphic intensity, only by the youngest
                                                                                                                                                              • Figure 43: Interest in graphics heavy online gaming and real world prizes, by age, July 2011
                                                                                                                                                          • Impact of Race and Hispanic Origin

                                                                                                                                                            • Key points
                                                                                                                                                              • Asians and Hispanics more likely to play network and MMOG games
                                                                                                                                                                • Figure 44: Weekly gameplay by platform, by race/Hispanic origin, July 2011
                                                                                                                                                              • Facebook popular regardless of race or Hispanic origin
                                                                                                                                                                • Figure 45: Gaming sites visited in last week, by race/Hispanic origin, July 2011
                                                                                                                                                              • Hispanics more likely to buy virtual goods/other items
                                                                                                                                                                • Figure 46: Game purchases on portals or networks in past month, by race/Hispanic origin, July 2011
                                                                                                                                                              • Hispanics more likely to try new games frequently
                                                                                                                                                                • Figure 47: Attitudes to finding new games, by race/Hispanic origin, July 2011
                                                                                                                                                              • Blacks slightly more likely to play multiplayer
                                                                                                                                                                • Figure 48: Number of playing companions in online social gaming, by race/Hispanic origin, July 2011
                                                                                                                                                              • Hispanics more likely to tell friends about games
                                                                                                                                                                • Figure 49: Methods of finding new games to play, by race/Hispanic origin, July 2011
                                                                                                                                                            • Custom Consumer Groups

                                                                                                                                                                • Those trying new games more likely to make purchases
                                                                                                                                                                  • Figure 50: Social gaming purchases in past month, by those who try new games frequently, July 2011
                                                                                                                                                                • Adults who try new games frequently more open to advertising
                                                                                                                                                                  • Figure 51: Attitudes to ads and advergaming, by those who try new games frequently, July 2011
                                                                                                                                                                • Most adults who like to try new games currently play multiple games
                                                                                                                                                                  • Figure 52: Attitudes to finding new games, by those who try new games frequently, July 2011
                                                                                                                                                                  • Figure 53: Number of playing companions, by those who try new games frequently, July 2011
                                                                                                                                                                • Adults who like to try new games view product placement more favorably
                                                                                                                                                                  • Figure 54: Attitudes toward product placement, by those who try new games frequently, July 2011
                                                                                                                                                                • Adults who try new games tell their friends about games they like
                                                                                                                                                                  • Figure 55: Playing with friends and discussing games with friends, by those who try new games frequently, July 2011
                                                                                                                                                                • Adults who try new games search high and low
                                                                                                                                                                  • Figure 56: Methods of finding new games to play, by those who try new games frequently, July 2011
                                                                                                                                                              • Appendix—Other Useful Tables

                                                                                                                                                                • Additional tables by household income
                                                                                                                                                                  • Figure 57: Attitudes to advertisements and advergaming, by household income, July 2011
                                                                                                                                                                  • Figure 58: Weekly gameplay by platform, by household income, July 2011
                                                                                                                                                                  • Figure 59: Attitudes to finding new games, by household income, July 2011
                                                                                                                                                                  • Figure 60: Number of playing companions in online social gaming, by household income, July 2011
                                                                                                                                                                  • Figure 61: Methods of finding new games to play, by household income, July 2011
                                                                                                                                                                • Additional tables by presence of children
                                                                                                                                                                  • Figure 62: Weekly gameplay by platform, by presence of children in household, July 2011
                                                                                                                                                                • Additional tables by platform played
                                                                                                                                                                  • Figure 63: Game purchases on portal sites or social networks in the past month, by platform played, July 2011
                                                                                                                                                                  • Figure 64: Attitudes to advertisements and advergaming, by platform played, July 2011
                                                                                                                                                                • Additional tables by gender
                                                                                                                                                                  • Figure 65: Gaming influentials, by gender, July 2011
                                                                                                                                                                • Additional tables by race/Hispanic origin
                                                                                                                                                                  • Figure 66: Attitudes to advertisements and advergaming, by race/Hispanic origin, July 2011
                                                                                                                                                                • Additional tables by custom consumer groups
                                                                                                                                                                  • Figure 67: Weekly gameplay by platform, by gender and age, July 2011
                                                                                                                                                                  • Figure 68: Weekly gameplay by platform, by race and age, July 2011
                                                                                                                                                              • Appendix—Trade Associations

                                                                                                                                                                Companies Covered

                                                                                                                                                                • AB Volvo
                                                                                                                                                                • Activision
                                                                                                                                                                • Amazon North America
                                                                                                                                                                • AOL
                                                                                                                                                                • Apple, Inc
                                                                                                                                                                • Best Buy stores (USA)
                                                                                                                                                                • BMW of North America, LLC
                                                                                                                                                                • Burger King Corporation
                                                                                                                                                                • Casual Games Association (CGA)
                                                                                                                                                                • Citibank
                                                                                                                                                                • Consumer Electronics Association
                                                                                                                                                                • Discover Financial Services Inc.
                                                                                                                                                                • Electronic Arts, Inc
                                                                                                                                                                • Entertainment Software Association
                                                                                                                                                                • Facebook, Inc.
                                                                                                                                                                • Fédération Internationale de Football Association
                                                                                                                                                                • Friendster Inc
                                                                                                                                                                • GameHouse Inc
                                                                                                                                                                • Gameplay GB Limited
                                                                                                                                                                • Google, Inc.
                                                                                                                                                                • Impulse Gaming Ltd
                                                                                                                                                                • International Game Developers Association
                                                                                                                                                                • Jamie Oliver
                                                                                                                                                                • Mars Incorporated
                                                                                                                                                                • MasterCard Incorporated
                                                                                                                                                                • Microsoft USA
                                                                                                                                                                • MSN (USA)
                                                                                                                                                                • MTV Networks
                                                                                                                                                                • MySpace.com
                                                                                                                                                                • National Broadcasting Company, Inc. (NBC)
                                                                                                                                                                • National Football League Inc.
                                                                                                                                                                • Netflix, Inc.
                                                                                                                                                                • News Corporation (The)
                                                                                                                                                                • Nickelodeon Networks
                                                                                                                                                                • Nintendo of America Inc.
                                                                                                                                                                • Pepsi-Cola North America
                                                                                                                                                                • Popcap Games Inc
                                                                                                                                                                • PricewaterhouseCoopers
                                                                                                                                                                • Rovio Entertainment Oy
                                                                                                                                                                • Small Planet Foods Inc. (Cascadian Farms)
                                                                                                                                                                • Suzuki Motor Corporation
                                                                                                                                                                • Twitter, Inc.
                                                                                                                                                                • U.S. Bureau of Labor Statistics
                                                                                                                                                                • Ubisoft (USA)
                                                                                                                                                                • USA Today
                                                                                                                                                                • Walt Disney Company, The
                                                                                                                                                                • Yahoo! Inc
                                                                                                                                                                • YouTube, Inc.
                                                                                                                                                                • Zynga

                                                                                                                                                                Social Network Gaming - US - November 2011

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