It’s a good month for Zynga. The company has one game which continues to thrive as the largest Facebook application ever and has a second application, Café World, which has raced up the charts in just a couple weeks. Playfish, now the second largest developer, also has had a great month with close to 20 percent growth, however it hasn’t been able to match Zynga who is simply dominating the Facebook platform.
As I wrote last week, while covering the explosive growth of Café World, the Facebook platform has essentially become a large gaming platform. While there are other community applications which continue to thrive, there is no comparison between games and the other applications. Facebook gaming has ballooned into a massive industry with virtual goods driving much of the revenue growth.
FarmVille has become an icon on the platform as no other application has come close to matching its massive user base. It has almost doubled the second largest application, Causes, in terms of monthly active users and has tripled the Facebook iPhone application in terms of daily active users. The second most popular, non-Facebook developed, application based on daily active users happens to be Café World which has just under 7 million daily active users.
The results have been nothing short of astonishing. If Zynga keeps at this pace, the company could soon come close to matching Facebook’s own revenue, at least until Facebook releases their payment platform and opens the gift shop to developers. Playfish has also proven to be a stellar company which not only creates top tier games but also has a great revenue model.
At the Social Ad Summit in New York City two weeks ago, Sebastien De Halleux, COO and Co-Founder of Playfish, emphasized the company’s focus on maintaining an amazing user experience. This means that rather than placing distracting banner advertisements, they have focused on production-heavy advertising. Comparable to television advertisement production costs, many advertisers have yet to venture into this area, leaving virtual goods sales to pick up the slack.
While the advertising revenue may not be at the levels Zynga, Playfish, and other companies would like, virtual goods are doing a great job of filling the void. As I wrote last week, virtual good sales are expected to surpass $1 billion in the U.S. alone this year. Much of those transactions will be taking place on the Facebook platform. Not surprisingly, Zynga will account for the vast majority of those transactions.
It will be interesting to see how this plays out over the next 6 to 12 months as the growth in this space continues to be phenomenal.