Monetization Model for Social Games

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Thanks to the massive popularity of Facebook, MySpace and other social network, social gaming, for example Farm Ville and Mafia Wars, has gained widespread adoption. The main revenue for these social games comes from advertising, virtual goods and subscriptions/memberships. Advertising

Since America has mature advertising revenue model for internet-based companies, advertising was the preferred monetization model for social applications and games provider in earlier days in North American. 1)Display Ads

Social game companies insert Ads/banner in its game and charge advertisers based on CPM or CPC. A big enough player base is the first prerequisite for an attractive ads revenue. Larger players have obvious advantage on this model. Furthermore, if the social game companies can lure the players to actually click its displayed ads thus increase the CPM/CPC, displayed ads can be a very effective revenue model. However, because social gaming companies’ low CPMs, they have difficulties to attract big traditional advertisers. Although advertising network provider such as RockYou helped inexperienced game providers on ad revenue, major social game companies only treat display ads as a supplementary revenue not a major contributor. 2)Application Installs

Typically, the advertisers in the social games are other social game developers who want to promote their games, especially small companies. Companies which already have big player bases such as Zynga found this model helpful. While in Asia, because of its immature online advertising, advertising contributed a very limited part of revenue for social game companies. Virtual Goods

Virtual goods sales allow users to purchase functional, decorative or functional & decorative in-game items to enhance the gaming experience. This revenue model first established in China and Korea and now plays a dominant role in Asia with a multi-billion dollar revenue. America just copied this business model in recently 3 years. In...
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