As more people turn to social networks for a video game fix, they’re also getting friendlier with the idea of forking over real cash for in-game virtual currency and items, according to a study commissioned by Seattle’s PopCap Games—the recent Electronic Arts acquisition that’s providing a lot of fuel for EA’s transition into more online and mobile games.
Digital transactions are the key to making money in social gaming, where free-to-play games are very common and revenue comes from charging for add-ons and extras that bring a player some special status, abilities, or even just decorations.
The online survey, conducted by pollster Information Solutions Group, shows two compelling statistics: First, more people are buying digital currency this year, compared with a similar survey in 2010. That measure went from 14 percent in last year’s survey to 26 percent in this year’s version, which is based on responses from roughly 1,200 social gamers in the U.S. and U.K.
If you extrapolate that response out to the broader population, Information Solutions Group says you’ve got about 31 million players buying virtual currency.
And secondly, people seem to be warming up to the idea—even if they haven’t taken the plunge in buying digital items yet. When asked how likely they were to pay for virtual items, about 46 percent said they were “very likely” or “somewhat likely” to open up their wallets. That’s up from about 32 percent of respondents in the 2010 survey.
Also significantly, the staunch holdouts who said they were “very unlikely” to pay for digital items showed a significant drop: In the 2010 survey, 47 percent of respondents showed that level of resistance. But in this year’s edition of the survey, the “very unlikely” fraction was down to 33 percent.
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All the usual caveats about surveys apply, and fellow polling geeks can read the detailed methodology statement from the pollsters here. But this would generally track with what the games industry is chasing as it evolves from a fixed-production studio model into a digital-service industry with different revenue streams.
Exhibit A in that transformation is Zynga, which has rocketed from founding in 2007 to the verge of a $1 billion IPO. Zynga’s games, largely tied to Facebook, have traditionally made money by getting players to pay for little accoutrements that gussy up their game-play—so if you’re building digital barns in FarmVille, you might buy the nails and lumber to complete that project.
The lucrative potential for this revenue stream is a big reason why Facebook insisted that Zynga and other developers use its proprietary Credits system for such purchases, with Facebook getting a 30 percent cut. Facebook is now testing those credits outside the social network proper, with the GameHouse division of Seattle’s RealNetworks serving as a a key guinea pig.
This overall consumer trend shows why Redwood Shores, CA-based EA was willing to pay $750 million in cash and stock up front for PopCap (with earn-outs, the price could reach $1.3 billion). EA is a pioneer and longtime leader in traditional, hardcore console gaming, but is charging after Zynga in the digital sector, with acquisitions like PopCap providing a lot of the fuel.
When it bought PopCap, EA cited analyst figures showing that worldwide social game revenue would grow from about $2.4 billion in 2010 to $7.5 billion in 2014. PopCap’s 2010 revenue was just over $100 million, and EA recently said the unit’s sales would grow more than 30 percent for 2011.
