Zynga, the king of the social gaming platforms, filed a $1 billion dollar IPO on Friday and unlike other recent IPO announcements, those are coins you hear jingling in their pockets.
According to CNN Money, Zynga earned $11.8 million on sales of $235.4 million in the first three months of this year alone. With social gaming expected to rise to $1.1 billion this year alone, they’re sitting very, very pretty.
Zynga isn’t the only group cheering about the rise in social gaming, many brands have found marketing success with in-game advertising. P&G’s Bounty made a big splash (then they used one towel to clean it up!) in the Electronic Art’s game “Restaurant City.” In the game, players can unlock rolls of Bounty towels, or let loose a special Bounty janitor, both of which have the power to clean up faster. I haven’t played the game, but I assume that faster clean-up means your restaurant can serve more customers and earn you more virtual bucks.
According to AdAge, pre-roll video game advertising has shown a 10% to 17% click-through rate and a recent Gatorade in-game campaign resulted in a 24% spending increase from people who saw the ad.
So social gaming is still on the rise and in-game advertising is working. So what’s the downside? For Zynga, it’s two-fold. First, the majority of their revenue comes from a small percentage of players who pay real cash for virtual products. Second, they’re highly dependent on Facebook and that has to have them quaking every time their contract renewal comes up.
Now I have to run because it’s time to harvest my virtual strawberry crop and complete construction on the Taj Mahal. A virtual gamers work is never done.