In the last IAB Now held in Argentina, Daniel Kafie, CEO and co-founder of Vostu, predicted the social gaming market will turnover $1.6 billion in 2012. According to consulting concern Newzoo, the social gaming industry grew 66% last year (as of early December 2011)and eMarketer has forecast earnings of $1 billion for 2012, just slightly under Vostu’s forecast.
According to Kafie, social gaming is currently a $600 million market. In Latin America alone, the market for social gaming is $350 million, including consoles and other platforms. Brazil, Latin America's largest market, has cornered $165 million of this market;while Colombia’s current market share is$40 million.
Today, Vostu is the largest social gaming company in Latin America, with more than 25 million monthly online usersin countries such as Brazil and Mexico. Daniel Kafie founded Vostu with Joshua Kushner and Mario Schlosser while studying at Harvard. Four years later, the company nowhas about 500 employees and offices in Buenos Aires, Sao Paulo and New York. Vostu’s market value is estimated at $300 million, according toTech Crunc estimates, a figure not confirmed bythe company.
Vostu social games allow people to use real money to buy virtual goods. Users can use cash to buy Vostu chips at local stores or by text message. Vostu is the most widely used social gaming company in Brazil and is accessed throughOrkut (owned by Google), the country’s leading social network, which currently has more than 50 million users. Vostu’s most popular games are Mini Fazenda, Café Mania, Joga Craque, Vostu Poker, PetMania, and Rede do Crime.
Vostu, which is specifically targeted to the Brazilian market, competes with Zynga,another established company in Latin America that offers games on Facebook such as FarmVille.
Daniel Kafie notes at least three trends in the social gaming market.
First, he suggests that it is becoming increasingly difficult to enter the social gaming market and increase user number. And the costs for hitting these goals are also getting higher. That’s why Vostu is planning toincrease its presence in Brazil through Orkut, although it has not completely abandoned the idea of launching its games on Facebook in order to reach other Latin Americanmarkets.
The second trend Kafie points out is increased gamer skills, which creates greater user expectations regarding the quality of the games. Users increasingly expect more developed and complete social games.
And a third trend is brand entry in social gaming platforms through branding and sponsorship. In this way, brands are becoming a part of the social games ecosystem, from appearing in the game itself to also being a part of it. For example, Microsoft launched a successful campaign in which users who became Facebook fans of the company received virtual money to use in Farmville. The results of that promotional campaign were significant, because 1.5% of FarmVille users became Microsoft fans.
On this last point, Kafie sees great opportunity for local brands, saying they can take advantage of their appearance in each market either through promotions, or via direct participation and appearance of their brands in the game itself.