Facebook's Forgotten Fountain of Youth - why Facebook's founding audience is being neglected by games companies

November 2010

Social networks were developed and popularised by young people, and they are still their heaviest users. But, ironically, the booming social network games market is dominated by middle aged housewives because younger people don’t play there as much there as they do elsewhere. Why has this come about and is there an opportunity for core games targeting traditional gaming’s heartland audience on social networks?

The demographic mismatch of Facebook gamers to Facebook users overall has long been one of the great incongruities of the Facebook games market. Whilst Facebook gamers are more concentrated around older users aged 25-54 with a clear female weighting, Facebook overall has a noticeably younger user base with 14-24 year olds of both genders the dominant demographic. In absolute terms, the 14-24 year old Facebook market comprises over 200 million users. When you also consider the younger skewed alternative social networks such as MySpace and Orkut, this combines to represent a truly colossal addressable market of young people, the majority of whom have grown up (and are still) playing games. There are many reasons why 14-24 year olds are so under-represented within the social network games market.

The first and most obvious reason is a lack of supply of suitable games; only a small proportion of higher quality social network games are actually made for younger demographics. The viral nature of social network gaming results in the proverbial chicken and egg: most higher quality social network games are aimed at the more affluent older audience who are incentivised to recruit their friends who rapidly become the dominant user base. Even games aimed at a broader audience have often ended up dominated by the older female players. The second reason is that companies are simply and quite sensibly following the money. The biggest group of paying players on Facebook is older females because they have the ability to pay and are most receptive to the sophisticated marketing and conversion techniques of some very savvy and commercially aggressive games companies. The market is at an early stage where many of these companies are driven by VC funding whose fundamental drive towards an exit means being laser-focused on maximising their most lucrative user base rather than nurturing the next generation of paying players. Since these younger players are harder to reach and monetise, the older demographic represents a path of least resistance.

The third major reason is that, while social network gaming largely improves on older female players’ games experiences elsewhere, it currently represents a step down for younger gamers. The young male and to a lesser extent young female gamer has many higher quality or more convenient alternatives to social network gaming such as console and handheld gaming, casual MMOGs and virtual worlds, and games portals and download services. The repetitive click-to-level-up gameplay simplicity and rampant “Share this?” spamming in many existing social network games simply does not compare favourably to many gaming experiences elsewhere. In contrast, the older female social network gamer has just casual PC download portals, Java mobile gaming and a few browser games portals as demographically suitable alternatives.

So, is there a viable market for this younger audience and, more specifically, will hard-core gamers ever take to social network gaming in material volume? We believe that the answer to both is yes, given time. While Facebook games aimed at male-oriented core gamers (mainly sci-fi and fantasy RPGs and strategy games) do not necessarily result in result in higher daily to monthly active user ratios (an indicator of engagement), they emphatically do result in higher ARPUs and ARPPUs. We have looked under the hood of several companies doing Facebook games aimed at a more hard-core audience and they are generally monetising at rates multiple times higher than those aimed at the older female audience albeit with audiences a fraction of the size. EA recently attributed a strong increase in monetisation rates at Playfish specifically to its Madden and FIFA Superstars Facebook games.

Perhaps one of the most interesting indications of the potential of this demographic is found in recent acquisition trends. Until early-mid 2010, most social network games company acquisitions were of companies developing games for older and female players, but in the last 6 months there has been a clear diversification into more hard-core and male territory with Kabam’s acquisition of Wonderhill, Playdom’s acquisition of Hive7 and Zynga’s purchase of Challenge Games. Flash is perfectly adequate for attracting a core audience (as proven by the hundreds of millions of players registered with German browser MMOG companies) but the evolution of a younger-oriented social network games market will undoubtedly benefit from a combination of higher production values, better games design and new browser technologies such as Adobe’s Molehill 3D APIs. As I argued in my last column, 3D games have proven wholly unsuited to certain categories of gamer, in particular the older female social network gamer. It is, however, much better suited to younger players although developers will still need to minimise friction (from necessitating 3D plug-ins and other downloads) to make the most from this market. We also foresee an increasing overlap between what the mature browser MMOG market and a social network gaming market that has a lot to learn about designing games for core audiences.

Whilst we don’t expect games targeting the older female audience to lose significant audience share overnight as the core social network games market evolves, we do expect the core market to grow its share of the market’s value and for the demographics of social network gaming to move towards that of the social networks’ overall user base. We also believe that social networks are absolutely ripe for a rich, social and immersive MMORPG that does for core social network gaming what WoW did for core MMOGs.