Why Social Games have become a $1 Billion market? Selling to the Impatient!

So the social games market has been exploding in growth.  Companies like Zynga, Playfish and Playdom are virtually minting money as they distribute their games via Facebook and other social networking sites.  It is funny as I speak to people about this business, they say to me “I don’t get it”.  And to be honest, that is the beauty of the model.  With about only 8% of users actually paying and really 2% driving 80% of the revenues, it is only a small amount of people that really “get it”.  If you actually dig in and understand why people pay for some of these games, it gets really interesting.  First of all, the motivations of why people play social games are:

1. Challenge of the game.  It is a game and people enjoy the challenge of winning or doing better.

2. Escapism.  I was speaking with a friend of mine of why she plays Farmville and she said she plays it because she like to take a quick break from other thing in her life. Games have often been a  a form of “escapism” and it is true for Social Games

3. Competing and Collaborating among friends.  These games are both competitive in which you want to do better than your friends.  However, a lot people especially women love to collaborate with their friends in order to get better at the game together.

So all of this is interesting but what actually makes people pay?

Well one reason why people pay is because of their impatience. The most successful games in generating revenues from microtransactions are about selling you virtual goods in order for you to achieve higher levels without having to wait.  This is actually a big difference from games designed for hard core gamers like those that play MMOGs like World of Warcraft.  Those games sell virtual goods in order to save you time.  Most of these gamers spend countless hours “grinding” it out in order to achieve higher levels.  However, social games have been designed to be used primarily by people that may go in it every day and spend a short amount of time (like 10 minutes) when they visit.  This is why it has become much more for the masses as it actually doesn’t consume that much of your day.  However, to progress in the game you have to wait.  Take Farmville for an example.  I asked a friend if she thought about actually spending money to buy “coins” and she said she almost did.  Here is what she said

“I was real close to buying coins.  I basically spent all the currency I earned to expand my farm.  I accidentally let some my raspberries wilt and had to wait 4 days for my next harvest.  I thought about buying at that point.  I didn’t and it took me almost two weeks to earn enough currency to afford to harvest a full crop.”

So for a lot of these games, people are ultimately paying because of their impatience.  A lot of these games are not about grinding it out but more about waiting it out.  The game sets you up to have aspirations to progress at higher levels and gives you a chance to get their more quickly by buying virtual goods to get you there.  Still sound weird to you?  Well, we have been accustomed to buying things because of our impatience like express delivery when you shop online.  And that is what driving the growth in the virtual goods market – building games that sell to our needs whether it be impatience, power or fame.