In In an interview to Reuters, Kevin Ryan, the leading Internet entrepreneur and former chief executive of online advertising giant DoubleClick, has said that Facebook is on course to earn $1 billion in revenue from social gaming this year. The forecast of $1 billion takes into account the revenues from Facebook Credits, which allow users to buy items for games and other activities on the social network. In early 2011 Ryans brother, Sean Ryan had picked up the post of director of gaming partnerships at Facebook.
Currently Facebook has more than 500 million active users, who tend to attract lot of ad related funds, as various corporates around the world step up their online marketing initiatives. In January, this year research firm eMarketer had estimated that ad spending on Facebook would exceed $4 billion. In 2010, it was less than $2 billion. When Facebook is already on track to garner $4 billion in revenues, then it should not be a cause for surprise if half of it comes through social gaming activities.
On 29th June, Zynga Inc, the dominant developer of social games played on Facebook, filed for a $1 billion initial public offering. In the IPO document, the name Facebook appears about 204 times, while the name Google appears only 10 times. This shows just how important Facebook is for Zyngas current business and future growth. Zynga relies on Facebooks viral channels, like News Feed and Notifications, to publicise its games and make them grow. It also relies on Facebooks Credits for monetization.
Being a private company, Facebook does not have to disclose financial information. So the exact figures of how much the company is making through social gaming are not known. However, in its IPO filing Zynga has declared that it generated $235 million in revenue during the first quarter of 2011, more than double the same period a year earlier. If this level of growth continues, then Zynga could be on course to generate more than $1 billion in revenue this year.
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