Today InsideSocialGames.com 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 InsideSocialGames.com 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 InsideSocialGames.com – check out the piece here: http://www.insidesocialgames.com/2009/10/01/calcuating-how-playdom-is-making-50m-from-28m-users/