Social games in a sweet spot right now

By November 15, 2010Games

This chart from a recent GP Bullhound research note explains why social gaming is such a hot area for new startups right now.  Social games have low development costs and high revenue potential – what’s not to like about that!

Expect the increasing competition to drive up development costs and the big players to leverage their scale advantage to make it tough for new entrants though.

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  • If you don’t mind, I would like to correct something in the picture above. On the Y-Axis, it says “Revenue Potential,” when in reality all of those categories have equal Revenue Potential. It should rather say, average revenue. As a game developer, I see games in communities that make it places whether they are good, bad, or had a huge backing.

    For example, (a bad example at best because it’s in multiple categories), but take Minecraft. This game is an ‘A’ game, there is nothing special about it, however for some weird reason thousands of people come to the stage and purchase it. Yes I do realize that it does also fit into another category, but that really isn’t where it belongs.

  • Hi James – I agree, the y-axis is a little confusing. I think the basic message is right though.

  • Marc Brandsma

    This is misleading. Cost of development is only one line in the overall cost of good. Maintenance (low), marketing (very high) and community management (can be anywhere from low to very high) also have an impact on the bottom line. Profit potential should be evaluated taking all the cost components for the product lifespan.

    There are wonderfully informative threads about social gaming on Quora.

  • Thanks Marc. I’m starting to think that Quora is taking over from blogs.