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37. Social Gaming

November 30, 2010

Social gaming giant Zynga is buying up gaming studios all over the country. Since creating Farmville and Mafiawars they have scoopied up other big name gaming studios like Bonfire Studios and Newtoy, which produced Words with Friends. However, Zynga does not seem interested in social game advertising. The social gaming ad market is poised to blow-up in the next year or so with predictions of a 30% increase in 2011. So why not take advantage?

Zynga cites ad placements by Mcdonald’s and General Mills, which were successful ventures, as examples of their work in advertsing. However, those ads are not replicable and there is no standardized system for buying ads with Zynga. 

The reality is that Zynga doesn’t really need ad revenue. They made over 500 million dollars this year by selling virtual goods. Virtual goods are programmed objects in games. For instance, a new tractor that you can use to grow more crops in Farmville might cost 1 real world dollar. Selling virtual objects for physical capital is obviously extremely profitable. So maybe Zynga does’t need advertising.

Although, if Zynga doesn’t want anything to do with ads, look out for other media companies like Disney  to start to entering the social gaming market becasue there is still demand for advertising in social gaming.

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