GameON Conference: Freemium games, social networks aren’t huge earners, “hard” times ahead for big publishers

Wednesday, 2 February 2011 04:36 GMT By Nathan Grayson

What’s the solution to all of life’s problems? Ask someone in the modern gaming industry, and they’ll give you three simple words: free-to-play. Speakers at the GameON finance conference in Toronto, however, see it as less like a cakewalk or taking candy from a baby and more like curing the resulting diabetes.

Piers Harding-Rolls, senior analyst and head of games at the market research firm Screen Digest of London, was especially vocal about the harsh realities of modern game distribution.

He explained that 2009 saw 57 million console gamers spend $7.5 billion, while 109 million social gamers – eager as they were to ensure that Facebook was transformed into a small rural community after everyone else died of suffocation under mountains of unwanted notifications – only spent $250 million during the same period.

All told, that means the average social gamer spends 57 times less than their nearest console counterpart. Harding-Rolls did, however, add that social gamers are slowly opening their hearts to the idea of opening their wallets, with 0.5 percent now spending $100 or more on game-related purchases.

Even so, the market’s still looking at a nice, painful uphill climb. Harding-Rolls explained:

“Only a small percentage of social games are monetized and revenues are not at all comparable to the traditional [retail game] market. It’s not like they can just turn off the business. We’re talking about public companies. They have to maintain a scale of business by keeping going on the console side and developing the digital side.”

“It’s going to be hard for the big companies to reposition themselves,” he added, pointing to publishers like EA. “They have to do it in a very careful way to realign to multiple segments. We’ll see a shift away from console development and layoffs as publishers jettison costs.”

In other words, it’s far from all sunshine and rainbows. Rolling with the punches, as it turns out, isn’t so easy when you’re the size of a mountain – and almost equally as mobile.

Thanks, VentureBeat.