Sunday, October 02, 2011

A 2% rule?

The economics of Zynga is amazing. 98% of people who use the service get it practically for free, and the company still makes a lot of money. The only comparable examples I know of would be Newcomen's steam engine where 99% of energy was not utilized for useful work, and the patent system, where estimated 98% of patent applications are commercially useless. Other candidates include online ads, but I don't know exact numbers.

As Zynga said in its SEC filing, the top 2 percent of loyal players are crucial to its success, as those players are “whales,” or the company’s biggest spenders. They play three times more than the average player.The top 2 percent play Zynga games for 120 minutes per day, compared to 40 minutes for an average player.
The data reveals that Zynga’s user base of more than 265 million monthly active users are playing games almost as much as the top hardcore gaming franchises.

In social games, Zynga has more than 60 percent of the overall market. While hardcore franchises such as Call of Duty and World of Warcraft are played for longer durations, Zynga’s Ville games are played four times more frequently. Zynga also takes advantage of those frequent sessions by constantly serving up marketing messages to stir up engagement, cross-promote  its other games, and handle transactions.

tags: games, economics, efficiency, synthesis, business, model, internet

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