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Established Firms Ruling the Online Games Market: Startups Struggling?

By Debjit on December 30th, 2011 

According to Facebook’s recent analysis of most popular online games on the social networking website, smaller start-ups are being overshadowed by better-resourced and more established firms such as Walt Disney’s Playdom, Zynga and Electronic Arts. Facebook has been increasingly used by gaming entrepreneurs to establish a base of users for their games, especially start-ups; however recent rankings show that big firms are getting higher user satisfaction as compared to others.

Online Social Gaming to soon converge to Mobile Gaming

Online Social Gaming to soon converge to Mobile Gaming

Facebook games have more than 100,000 monthly users and barriers to entry into this arena have risen considerably in the past year, according to Steve Bailey, games analyst at IHS Screen Digest. “It’s a market that’s achieved maturity very quickly. Competition is now at saturation and the cost of acquiring users is far greater than it used to be”, he says.

Since scale is vital for developers looking to expand within the Facebook app market, companies like Zynga have benefited from this. Zynga has developed the four out of the top 10 most popular games on Facebook in 2011, a fact backed even by market tracker AppData. According to AppData, Zynga with 225m users is the largest developer, followed by Electronic Arts and Wooga.

But despite these staggering figures, Gardens of Time developed by Disney’s Playdom got the number one spot. The second spot went to Sims Social, making Electronic Arts’ acquisition of Playfish a definitive success.

In May, Caesars Entertainment reportedly paid $80m-$90m for a 51% stake in Playtika, the maker of Slotomania – Slot Machines, the 9th most popular game on Facebook. With this investors see a positive future for new start-ups in the arena. Digi-Capital’s managing director Tim Merel said that investment and M&A in mobile and online games shall continue to accelerate.

Analysts agree that with Facebook getting hooked with smartphones, the social games market could converge with mobile games in the next 18 months.

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Established Firms Ruling the Online Games Market: Startups Struggling? was originally published on on December 30, 2011 - 3:11 am (Indian Standard Time)