E Will Gaming Companies Break Into The Next Frontier?

Over the last 10 years, we have witnessed a change occur in nearly every other technological service. Little though has happened in the gaming industry, especially in online gaming. In fact some companies are yet to embrace the aspect of online gaming due to the challenge of monetization.

However, a few have shown interest and in the process some have paid the price for that. For instance, Zynga (NASDAQ:ZNGA) and Caesars Entertainment (NASDAQ:CZR) have struggled in recent years due to slowdown in income.

Specifically, the case of Zynga is incomparable to any other because the company solely relies on online social gaming. Surprisingly, Zynga is one of the few companies that seem to understand the future of gaming.

Social gaming is the next frontier in the gaming industry and at the moment Electronic Arts (NASDAQ:EA) and Zynga along with a few others seem to be pursuing this new market with intent. Other companies like Sweden-based Net Entertainment are also in pursuit with slots like the Wonkywabbits game and Starburst slots among others.

Nonetheless, the overall case scenario at the moment is that gaming companies are making more money from non-social games, which begs the question on whether they will be putting more money in developing top class social games.

Since Zynga’s Farmville, King Digital’s (NASDAQ:KING) Candy Crush Saga, and Rovio Entertainment’s Angry Birds, there has been hardly another social gaming Franchise that can claim to have hit the scales in the recent past.

This is probably due to the manner in which both Zynga and King Digital have failed to deliver in terms of revenues in recent quarters. Companies are now caught up in two minds on whether to pursue this interesting market and risk compromising on income, or limit investing in the market and risk trailing others by the time someone finally finds the magic that could help monetize social gaming. A part of the problem for gaming social gaming companies has been due to the shift to mobile platforms with many people now playing the various social games via mobile.

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The material appearing on this article is based on data and information from sources I believe to be accurate and reliable. However, the material is not guaranteed as to accuracy nor does it purport ...

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Old Time Investor 6 years ago Member's comment

Really interesting, thanks for sharing.

Bruce Powers 6 years ago Member's comment

Hi Nicholas, thanks for this article. However, I question some of your assumptions. Why do you think social gaming is the next frontier? Aren't all of the gaming power houses like Microsoft, Sony and Nintendo doubling down on their hard core gaming platforms like the Xbox One and Nintendo Wii U and PlayStation 4? Do you have sales figures showing that there is more profit in social gaming than traditional gaming? (If so, I stand corrected)

Also why do you feel that Zynga is one of the few companies that understands the future of gaming? That's a pretty strong statement but one I find curious. What are you basing it on? I would think the companies experimenting with immersive virtual reality games are more inline with where gaming is headed.

Of course I'm biased and don't really think casual games are considered real video games :). Thanks for a great read.

Maithya Kitonyi 6 years ago Author's comment

Hey Bruce, thank you for your comment. When I say social I am looking at it from a global perspective, the ability to bring players from different locations into one platform enabling them to interact with each other.

I know that there has been talk of technology like Oculus VR being one of the innovations that could enhance the social status of platform games, but we are not there yet. And as fa as Zynga, I mentioned it because it is the one company that really made social gaming popular. A couple of years it was among the best, but it may now have slipped back because of obvious reasons (revenue slowdown etc).

And yes, platform games are the ones driving revenues for gaming companies. Also I did not say that there is more money in social gaming than traditional gaming, I only said that if companies can find a way to fully monetize social gaming without pissing off players, then that is the next big shift in the gaming industry. That's my view.

Bruce Powers 6 years ago Member's comment

Thanks for elaborating, I think you make some excellent points.

Susan Miller 6 years ago Member's comment

He's talking about social games vs. non-social games. Not necessarily mobile games vs. platform games. I'm not exactly clear what the difference is however, perhaps the author can elaborate.

Black Widow 6 years ago Member's comment

You can find a good definition of social gaming here:

www.adweek.com/socialtimes/social-games/1695

Ayelet Wolf 6 years ago Member's comment

I'm also confused. The author states "Zynga is one of the few companies that seem to understand the future of gaming... Social gaming is the next frontier in the gaming industry and at the moment Electronic Arts (NASDAQ:EA) and Zynga along with a few others seem to be pursuing this new market with intent."

But he then goes onto say "gaming companies are making more money from non-social games." So my question to you Nicholas, is if that's the case, why are social games the future? If the money is in non-social, I would think that's where the future lay, no?

Katy Lin 6 years ago Member's comment
"Since Zynga’s Farmville, King Digital’s (NASDAQ:KING) Candy Crush Saga, and Rovio Entertainment’s Angry Birds, there has been hardly another social gaming Franchise that can claim to have hit the scales in the recent past." I agree and I think this is because there is now a glut of such games. Every time a game does remotely well, there are a million copy cat games which are exactly the same. It's overload for consumers.
Alpha Stockman 6 years ago Member's comment

There are so many great free mobile games out there (albeit many are ad-supported), I don't know why anyone would pay for them. That's why I haven't been willing to invest in this area.

Derek Snyder 6 years ago Member's comment

Some of the best "free" games aren't truly free - many can't be beaten without purchasing expensive power-ups or upgrades. Others can but take a tremendous amount of patient to advance but you can buy shortcuts. I admit some of these games are so engaging - even addictive that I myself have shelled out money on games which I swore I never would.

Trust me - this is a burgeoning area worth exploring investment wise.

Terrence Howard 6 years ago Member's comment

There are some great games out there which really can't be beaten without paying a penny (the original Angry Birds and Plants Vs. Zombies comes to mind), but it's so hard to tell what's really "free" these days. What's worse is that some mobile games which I PAID for still wanted more money for upgrades and such.

Call me old fashioned, but I miss the days when you paid a flat fee for a game and new exactly what you were getting - the entire game. But perhaps the author is right and this is the future of gaming.