Editor's Note: This is a guest post written by Alex St. John, President and CTO of hi5, on the state of the social gaming market.
When Facebook recognized that early social media games were getting a free ride on their network, they shut down the free viral channels these games relied on for audience, started charging market prices for advertising, and demanded a cut of all commerce transactions (see ?Facebook Credits?). This changed the economics of social games dramatically. Reaching a large audience easily and for free ceased to be a benefit of developing social media games. In the downloadable casual game business, game developers get a 25%-35% share of the revenue their games generate online when published via channels other than their own. With Facebook charging a 30% premium for Credits and taking an additional cut on advertising, it?s likely that the cost of marketing a social media game is converging on what it costs in the mature downloadable casual game business.
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