While 2011 was pretty big as far as social gaming went, the market seems to have dropped off, and pretty substantially, too. The question of the day, of course, is why did investors bug out of the social gaming market? The answer, of course, is a bit more complex than expected.
First, a few basics: a new report from the digital investment bank known as Digi-Capital made the picture clear. Investments for 2012, so far, have hit $591 million, with a little over two and a half months to go in the year. This is a pretty fair number, but when you consider that 2011 brought in just over $2 billion in investments
, it makes the picture look much less pleasant. The total number of transactions involved is about the same, and may well end up surpassing 2011's total. Right now, there are 130 transactions for the year so far, and given that there were 152 in 2011, it's on track to be about the same. But the average amount of those transactions has dropped significantly, down to an average of $4.5 million from $13 million in 2011.
Basically, what's driving the loss seems to be an overall shift in gaming habits--and thus development--away from social gaming and into mobile gaming instead. Companies like Zynga
have already spotted this particular trend and are making moves in that direction. But it's not just the movement to mobile gaming that's decreasing investment from places like Digi-Capital; Kickstarter
is shifting some developers to a new source of funding to get games in play as the developers take their cases directly to the people to get funding. Considering the growing numbers of games on Kickstarter, a phenomenon we talked about right here not so long ago, this is also a safe bet in terms of explaining decreased investment totals, if not necessarily greatly decreased total numbers of investments. Plus, of course, it's worth noting that the economy is still flagging a bit, so investors putting less of an investment into game development certainly isn't out of line.
While this doesn't bode well for social gaming, it does bode well for mobile gaming, which has plenty to look forward to thanks to continued improvements in HTML5 game design, which looks to expand gaming across multiple platforms, as well as from things like the recent restart of Games.com that AOL put forth.
It's not likely that games are going away any time soon, but how investors put money behind them, that just might prove different after all.