Industry Prediction #3: Brands Will Seriously ENter Social Gaming with Branded Virtual Goods & Branded Games

Game developers and social networks have largely been focused on generating revenue through advertising, or selling virtual goods to users. Now, a trend is emerging where these two opportunities are coming together, and the industry is starting to see greater advertiser interest in sponsoring Branded Virtual Goods and creating themed Branded Social Games.

Celebrities have been selling branded goods on sites like Gaia Online, WeeWorld and Zwinky for quite some time – rapper Snoop Dogg has earned over $200,000 in virtual goods revenue since 2008 – and now consumer brands are dipping their toes into the space. In 2010, 7-Eleven promoted Zynga games through branded merchandise; Cascadian Farms offered branded crops on Farmville; Honda launched its new sporty hybrid CR-Z on Car Town; and during the 2010 World Cup tournament, Fox and National Geographic became “sponsors” in Playdom-owned soccer game Bola.

As more consumer brands try out Branded Virtual Goods, we expect that other “super” brands will also enter the market and that the BVG market will grow to become a $318 million industry by 2013 (see Branded Virtual Goods Market Report by Viximo and Virtual Greats). This growth with be driven largely by the increasing number of people that are engaging with social networks and online games. A new report from Nielsen Co. says that Americans spend nearly 25% of their Internet time on social networks/blogs and 10% of their time playing online games; a 43% and 10% increase respectively over a year ago. As players grow, demand for BVGs is expected to grow as well.

However, Branded Virtual Goods will only be the tip of the iceberg. Companies are also venturing into Branded Social Games, creating entertainment experiences that are built on the use of their products. In advance of the World Cup, FIFA launched a soccer game on Facebook called Superstars. More recently, Purina created a branded pet-themed game and MTV debuted I Woo You, a dating game with promotional tie-ins for MTV’s shows; (both of Facebook); and with media mogul Disney having acquired Playdom, the stage is set for a series of Disney-branded social games.

Branded Social Games have been tested by brands that cross a wide range of product categories – entertainment, media and consumer goods. This not only illustrates the broad appeal of the channel as an online direct-to-consumer marketing medium that reaches powerful demographics, but is also an indicator of its potential for exponential growth in the near future.

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