Casual Games May Be Recession-Proof; Companies Report Record Revenues, and Some Surprising Trends

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40 minutes; now the average visit lasts 90 minutes, an eternity in Web time.

And that means users see more ads while they’re on the site—which, along with the huge popularity of the site’s recently resurrected Bingo Zone, has helped to make the Gamesville division of Lycos profitable this year. “That’s a first in recent history,” Cummings says.

2. Casual Games Appealing to a Larger Cross-Section of Consumers

Online game companies have long seen women in their 30s and above as their core audience. WorldWinner and its sister site, the online arm of TV’s Game Show Network, “tend to service Mom,” says Meyer. “It’s for those moments when the kids are in bed and she has a few moments to herself. It’s really ‘me’ time.”

Women may still make up the largest part of casual games’ user base, but at Gamesville, at least, those women are in a lower age bracket than they used to be. “We have noticed its been trending much younger over the past 12 months,” says Cummings. “As you might imagine, with Bingo being so big, our audience used to be a little older. Today, it’s more the college age group up to around age 54 that makes up the core audience.”

Lewis has observed something similar at Big Fish. “Our customer demographic skews from literally 5 years old to 95, but the peak is women 35 to 50 years old,” he says. But over time, the company has picked up many more users who are under 35 or over 50. “The bell curve is flattening,” says Lewis, who says the pattern is “consistent with the dynamics of other mass markets as they have matured.”

3. Casual and Mobile Gaming Positioned to Overtake PC and Console Gaming

With more people seeking inexpensive home entertainment, executives say, casual games could grow even faster than the red-hot console and PC game market, which pulled in more than $1.3 billion in October (a 19 percent increase over the same month in 2007). “Any industry sector with a B2B element is going to suffer,” predicts Xconomist Trip Hawkins, the founder and CEO of San Mateo, CA-based mobile game maker Digital Chocolate (and before that, founder of gaming mega-giant Electronic Arts). “With games, that means that brick and mortar retailers are cutting back on inventory purchases of boxed console games. Arguably, mobile games will fare the best, because it is not B2B—we only get paid when the consumer buys, and it is the lowest-priced form of gaming that does not have a free alternative.”

Jim Gregoire, vice president of marketing at Boston-based mobile social networking and gaming site MocoSpace, says his company is seeing that effect already. “We continue to see strong growth in our numbers through this downturn as the mobile Web grows in its influence and people look for cheap or free entertainment outlets,” Gregoire says. Page views for MocoSpace’s mobile games have been rising “on an equal plane with all other activity” on the site, he says. “It has come close to doubling since January”—helping to land MocoSpace at the top of Hitwise‘s most recent rankings of mobile entertainment sites.

David Roberts is CEO of Seattle-based PopCap, which just rolled out a sequel to its blockbuster casual game “Bejeweled.” He says the recession is likely to spook some gamers into avoiding “higher-priced items that feel more like luxuries”—including, perhaps, those $30 to $60 PC and console games. “Consumers will be looking for more value in everything they buy, and they’ll defer second- and third-tier consumption until they know what’s going on in their lives—essentially a flight toward quality that I like to think will benefit games like those we make at PopCap,” Roberts says.

4. Some Types of Advertising Revenue Remain Strong

Typical Web banner ads and other forms of display advertising are gradually drying up as a revenue stream, say gaming executives. “As far as ad-driven gaming goes, demand for free game-play will probably go up, but I expect decreased advertising budgets will lead to a decline in available sponsorships,” says Roberts. (PopCap itself relies on a mix of game purchases, display advertising, video advertising, and, in partnership with WorldWinner, fee-based tournaments.) “There is so much inventory available across the board, so it comes down to … Next Page »

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Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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4 responses to “Casual Games May Be Recession-Proof; Companies Report Record Revenues, and Some Surprising Trends”

  1. Anyone interested in the game business in Massachusetts might want to check out the Massachusetts Technology Leadership Council. They just had their first panel session about the game industry here, and it was a big success. They are planning to start a “games cluster”, which is a group that would meet regularly to talk about promoting the game industry in Massachusetts. There are actually a lot more computer game companies around here than most people are aware of.