Why Social Gaming is on the decline? Blame cannibalisation by mobile and OTT

Social Gaming is on the decline - not terminal decline, just platform cannibalisation. Well mostly. Some Social Gamers just go off and play other newer games. The big reason for the decline in social game, I believe is the rise of free games in App Stores like Android Play and iTunes App Store. These App Stores provide a direct to user channel for promotion of games.

5 reasons Social Gaming is on the decline

There are 5 reasons this is happening

1. Mobiles and Tablets - if you can’t login to play the game you won’t play. This is a device and platform issue.
2. Game popularity fades - other games come along to steal your crown
3. Cannibalisation of existing base - users stop playing one game title and move to another
4. OTT (Over the top) & going direct - if a user doesn’t need to login to Facebook to play a game
5.  The rise and rise of free-to-play games from App Stores of the ‘same game’ by a different name

Recently Read Write Web did a post on Zynga and the decline of social gaming on Facebook. A bit of this article appears below -

Zynga Games - Daily Active Users

At the time of its IPO in mid-December, Zynga had the top five games on Facebook by daily active users. But, according to app tracking website AppData, three of those five apps have declined dramatically in Daily Active Users (DAI) since then.

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <strong style="margin: 0px; padding: 0px;"><span class="s1" style="margin: 0px; padding: 0px;">Dec 12, 2011</span></strong>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <strong style="margin: 0px; padding: 0px;"><span class="s1" style="margin: 0px; padding: 0px;">Jun 12, 2012</span></strong>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">10,110,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">4,600,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">8,100,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">4,500,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">7,200,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">4,100,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">6,300,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">6,800,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">5,700,000</span>
  </p>
</td>

<td class="td2" style="margin: 0px; padding: 0px;" valign="top">
  <p class="p3" style="margin: 1em 0px; padding: 0px; text-align: left;">
    <span class="s1" style="margin: 0px; padding: 0px;">6,600,000</span>
  </p>
</td>

The main reason for Zynga’s stock price fall this week was a report from financial analyst firm Cowen and Company entitled “Facebook Gaming in Accelerating User Tailspin.” The report stated that Zynga’s social gaming daily active users declined by 8.2 percent to 54.2 million in May.

According to Cowen analyst Doug Creutz, that’s because casual gamers are moving away from the Facebook platform to play games on their smartphones and tablets. However Creutz hedges his bets, by noting that Zynga is “aggressively pursuing mobile game development.” Accordingly, he has a “Neutral” rating on Zynga shares.

Linkage

Read Write Web

Meet the author

Damien Saunders
An experienced management consultant and business leader interested in digital transformation, product centred design and scaled agile. If I'm not writing about living with UCTD (an autoimmune disease), I'm probably listening to music, reading a book or learning more about wine.
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