There is no question that the social gaming market has the potential for huge returns. Today it is an industry worth billions of dollars and, the largest game developers in the world are quickly moving to the cloud as they recognize its potential and inevitability in the future of computer gaming. In this article we will take a look at the world's top five online game developers and what they are doing today with regard to cloud gaming.
What is the appeal of social gaming?
People play online games for different reasons. According to studies done on the subject, there are three main reasons why people engage in social gaming:
- To entertain themselves when they are bored.
- To be part of a social circle and fit in with their peers.
- As a way of escaping reality.
There are several other reasons apart from the top three. Many gamers engage in social games because of the competitive aspect. In fact, this is starting to gain more widespread appeal as a competitive sport marketing and competition structure starts to emerge (a good example of this phenomenon is the
incredible popularity of StarCraft in South Korea as a spectator competitive sport.)
Trends in social gaming
Initially, most social games used a pay-to-play subscription model. However, one of the largest trends in social gaming has been the acceptance of a free to play model. This allows companies to quickly monetize on the aspects listed above that draw people to social gaming. There are three main ways in which companies monetize on free to play gaming:
- Some games allow access to all in-game content but sell vanity items and advantages to gamers. While it is possible to experience the whole game for free, paying subscribers will have an advantage in the form of a richer, easier, or more customizable gaming experience.
- Other kinds of games restrict access to certain parts of the game, but leave enough of it for free to attract new players. This model of gaming strongly encourages players to purchase a subscription to access the full version.
- There are some games (mainly social browser games) that use a completely free to play model and monetize on advertisements and product placement, offering customers a paid version that is ad free.
The top five gaming companies in the world and their involvement in cloud gaming
- Activision-Blizzard. This company tops the list with an impressive annual revenue of $4.7B from online gaming. They are the second overall most important game developer in the world and, thanks to the massive popularity of World of Warcraft, the undisputed leaders of MMORPGs (Massive Multi-player Online Role Playing Games.) New games released in this genre are inevitably measured against World of Warcraft and there hasn't been a serious contender to its place at the top in the eight years since this game was released. World of Warcraft uses a standard subscription model.
- Vale. This company generated $2.25B last year from online gaming. This revenue has mainly been made thanks to first person shooter games, starting with their Counterstrike series and continuing to their Team Fortress series of games. They pioneered the free-to-play movement by switching Team Fortress to this model and selling in game vanity items like attractive hats for their players' avatars.
- Sony. Although there is serious competition between Sony, Microsoft, and Nintendo, with $1.9B last year, Sony is leading the console race when it comes to online gaming. These revenues mainly come from the company's implementation of the PlayStation Network (PSN.) This online service has no monthly subscription fee, unlike its competitors', and has allowed Sony to generate impressive profits from online gaming without releasing as many high profile, expensive online gaming titles.
- Microsoft. Xbox Live Arcade is PSN's biggest competitor, and has allowed Microsoft to generate $1.75B in the last year alone. Microsoft's revenue, unlike Sony's, comes mainly from their popular games including their main cash cow, Halo.
- Zynga. No discussion of cloud gaming would be complete without mentioning Zynga's successful integration with social media networks in order to develop some of the most played games on the planet. Although they are currently experiencing some backlash, there is no question that their social gaming model is more likely to represent the future of online gaming than the production of expensive, risky blockbusters.
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About the Guest Author:
Nida Rasheed is a freelance writer and owner of an outsourcing company, Nida often finds herself wanting to write about the subjects that are closest to her heart. She lives in Islamabad, Pakistan and can be found on Twitter @nidarasheed.
