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Ray Tsuchiyama: How the social gaming revolution being lead by Zynga is threatening traditional game companies. Games are getting cheaper, more plentiful, more mobile and much more social.

Approximately 250 – 300 million Facebook users (1 out of 2 Facebook users) play Zynga games on a monthly basis, and this population – larger than Brazil’s 200 million citizens — generates five to six terabytes of data transmitted per day.  U.S. research firm Parks Associates forecasts revenues in the social gaming market will increase five times from $1 billion now to $5 billion in 2015 (this is already seen as conservative) – and these are dollars taken away from traditional gaming market, plus new high-growth niches (no inventory, like Amazon’s warehouses of books and thousands of other “real” products) in virtual goods – a “recurring revenues” business model that hardware gaming makers missed, especially the collective potential of SNS economies of scale, that is, micro-payments from massively populated online “communities” that adds up to “real money”. Full Article on Forbes

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Its interesting that the development community has known about this phenomena for a while-- creating an increasing number of social networking games in the background-- but the business media is only now coming up to speed as more of these games go live. 


I started playing World of Warcraft when it was first introduced and saw how the paradigm of gaming shifted. All of a sudden people were spending real money to buy virtual "gold" on Ebay. People who would have never met became friends in real life. I even knew a police officer who would bring his laptop with him on patrol and link into the game from his car. But a dark underside also emerged. Gold Farmers would hack people's accounts, transfer all items and "gold" to a dummy account then resell everything on Ebay or other places for real money. Oh yes, people made a living turning 000101100 (binary bytes) into cash.

And of course, as the game gained traction and became wildly popular, people playing WOW lost interest in traditional console gaming. It was a perfect storm. I stopped playing that game two years ago but things were shifting. Clearly, some Angry Birds, Farmville denizens, Evony castle builders and Mob Warriors saw  this shift  as well.


Now, we have several tools to build social games. The Unity 3D gaming engine is an exciting platform for developing  online games for Facebook, mobile devices and whatnot without using Flash.

If anyone is interested, there is also a tutorial series taking shape at called "World of Webcraft" on how to build a social networking game from scratch for Facebook using L.A.M.P. and Flash. It's free and an interesting series. Let's flood Facebook and the App Store with games with the "Made in Hawaii" label!




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