Monetizing Social Networks – Part 2

June 17, 2008 at 5:39 pm Leave a comment

In my previous post, I discussed social networks and started the thread on the different ways to earn revenue aside from the ubiquitous ad based model. In this post, I’ll continue the discussions and focus on another emerging way that social gaming companies are trying to monetize by leveraging prepaid cards. The debate is still on as to whether console gaming will some day go away as more and more gaming companies design online games thanks to ever increasing network bandwidth and cheaper hardware. There is a trend though for more and more games being developed and played over the Web, especially in the PC gaming segment. In certain parts of the world like Korea, where Internet connection speeds are very high, downloading games online and/or even playing games online are very popular.

To capitalize on this huge audience, gaming companies can either keep the games free and show ads. But like I discussed before, ads are annoying, often time targeted at the wrong audience and it is hard to determine ROI. Microtransactions are popular, but by it’s very nature of asking people to part with their cash, mostly via credit card payments, means that a huge segment of the tween and teen population cannot actively participate. That is where prepaid cards are a huge benefit. Big name gaming companies have caught on to this idea and are fighting to get shelf space in major name retail stores where they can display their prepaid cards and entice the younger community.

But what does this mean for smaller companies who do not have the dollars to compete for shelf space? If they are selling a physical product (like a boxed PC game), they could include the prepaid cards with the box and charge extra. But if you are selling an online product, then yes, it does mean that probably the larger companies with more marketing and development dollars will win the retail battle and dominate that space.

Either way, online gaming is a huge business – during 2007, online games in North America generated revenue of $1.6 billion. The figure is projected to surge to $3.8 billion by 2012, according to the Yankee Group, a Boston-based research firm. This only goes to prove that the prepaid cards method of monetizing social networks and social gaming is here to stay. What are your thoughts? Is your company using prepaid cards in unique, innovative ways? Are there challenges that you are facing on this front? I would love to hear from other companies who are experimenting with this, or other methods of monetization (future articles to discuss many other ways of monetizing social gaming).



Entry filed under: Marketing, Social Gaming. Tags: , , , , .

Monetizing Social Networks – Part 1 Serious Gaming

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