Claim That Playdom is Making $50 Million Seems Overstated

Today reported Playdom was making upwards of $50 million, but taking look at the numbers, they just don’t seem to make sense.

The numbers presented in the article infer that Playdom is making more money per MAU than Zynga:

  • Playdom $50 million annual from 28 mil MAU = $0.149 per user per month
  • Zynga $200 million annual from 129 mil MAU = $0.129 per user per month

Yet I would argue that to generate revenue from users, a game has to be sticky. As a proxy of stickiness, I would use the Daily Active User divided by Monthly Active User metric — if it’s stickier, a larger percentage of your monthly users are going to be on it every day. Based on that measure (looking only at Facebook that has this data available), Zynga is nearly 2 times sticky as Playdom:

  • Playdom on FB: 1.78m DAU/28.0 m MAU = 14.8%
  • Zynga on FB: 36.4m DAU/127.7 m MAU = 28.5%

I realize that Playdom has a large base from MySpace, but the number of users are not that much larger. From the top 25 applications on MySpace (also reported by today), Playdom has 51.9 million users vs. Zynga’s 39.2 million. You may suggest that MySpace users offer a bigger propensity to pay, but demographically the average income (from Quantcast) on MySpace is between $0-30K where on Facebook it is $60K plus.

Based on this, I would think Playdom is closer to the $33 to $35 million range. Still a great business, but their transition from a declining MySpace to Facebook has been incredibly difficult to date, ranking 16th on the developer list in terms of Daily Active Users and behind several of the Chinese developers I mentioned yesterday.

Update: After some back and forth conversations with Eric Eldon (see comments below), I’ve done a fuller analysis, trying to calculate the value of MySpace’s contribution as well as incorporating the stickiness of the applications, which makes the $50 million more plausible. The analysis has been picked up as a guest blog piece on – check out the piece here:

7 thoughts on “Claim That Playdom is Making $50 Million Seems Overstated”

  1. Or of course, the Zynga figure could be a LOT higher 😉
    Eldon noted that it is also possible that MySpace, with 63% of the users in the US, is paying out higher per user than Facebook (30% of users in the US), but I’m not sure based on the demographics of the users that this is enough to make the difference.

  2. Interesting stuff, Eric. A few points:

    These are Playdom’s direct numbers, not my interpretation of them 🙂

    Game developers have long noted that MySpace users pay more, sometimes 2x what Facebook users pay. The reason, from my understanding, is that Facebook users are located around the world, and many of them use the site all the time but don’t have the money/desire to pay for things like virtual goods. The Quantcast numbers you cite only look at the US….

    MySpace’s users are mostly in the US, which is the most lucrative market for games based on social networking platforms (I’m not considering China’s Tencent here, for example).

    So, it is entirely possible for Zynga to be stickier, but as that stickiness is only visible on Facebook, the company would appear to have a hard time monetizing these users.

    Also clouding the picture: MySpace only reports total installs, not monthly active users.

    And finally, yeah, Zynga’s numbers could be a lot higher!

    1. Wondering if stickiness wouldn’t be somewhat similar across the different platforms. I would usually think that first mover in a game genre has an advantage (e.g. Playdom with Mobsters on MySpace before Zynga got there, and the opposite on Facebook, with Zynga leading with Mafia Wars), but the FarmVille/Farm Town example leads me to discredit that a bit. Because if you think that stickiness is similar, the Zynga 2x stickiness, would more than off-set the Playdom 32% more installs on MySpace.

  3. I’ve been told that X-Wars style games monetize better than any other genre. So the balance of types of game may be a key factor.

    Also, looking at MAU as a guide to revenue is probably misleading, as there’s a lot of churn. I’d take average DAU and revenue / day / DAU.

  4. “To generate revenue from users, a game has to be sticky: compelling enough to get a user to come back day after day and engaged enough to want to open their wallet.”

    I’m unsure how dividing DAU / MAU validates these claims. Statistically it looks nice, but it says nothing of end user buying habits. Care to explain your reasoning?


    1. Thanks for the comments Jon — I will have to go with my experience running where we got a lot of trialers that came in and played the game, but the people who drove our sales were those that came back more than a couple times in the first couple days. Once we reached a certain level of engagement with the game, users were more prone to open up their wallet. The DAU to MAU ratio is indicative of the same engaged user to trailer activity. You may have great reach and get a lot of people to trial (a large monthly user base) but more engaged players (the daily user numbers) are the ones more likely to open up their wallets.

      Of course I am also assuming that all else is pretty equal – that the items the developer has chosen are compelling and that the check out process and payment methods are optimized. For these large developers, I think they do a pretty decent job of this.

      Again, the DAU/MAU is only an indicator, and I’d love one of the developers to provide what Daniel James suggests above. Lacking that, I think we have to fall back on the DAU/MAU metric to show relative potential of different games.

  5. From my conversations with the various aggregators and other players in the space, a major element of monetizing customers right now is offers rather than direct pay. Thus, the MySpace customer has a lower average problem (probably because they are younger) but for that exact reason they are much more likely to complete an offer (and as they are younger they are probably eligible for more offers), thus generating more revenue than relying on direct pay.

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