At any given time, my wife has at least 5 "Words with Friends" or "Hanging with Friends" games going. They get serious engagement and that's worth a lot of money.
Zynga has moved aggressively into mobile gaming and, from what I can tell, they're going to be successful there. If they stay strong there, their reliance on the FB platform will be less of an issue.
EA has a market cap of $7.68B so I see little issue with this market (granted, I no nothing of their specific financials so I can't comment on their valuation).
5? Lightweight. My wife has 20 going and that's only because 20 is the max.
But she purchased the $1.99 mobile app and hasn't bought anything from Zynga since. She abhors Farmville and all Facebook games in general. She doesn't see the ads from the paid app. So where is the revenue in users like my wife?
According to articles on the subject, there is no revenue in users like your wife. But the truly desperate woman blowing 10k on FarmVille credits covers her and 10,000 other 99c purchasers.
Freemium games don't have some secret way of monetizing all users effectively, quite the contrary. They give the product away for free to increase exposure and a small subset of users with piles of disposable income or a high credit limit pay for everyone else, and that frequently results in making more than what they would make if they charged everyone some small fee.
My friend who works at a Zynga competitor claims that they make most of their money from what they call "Whales", a tiny subset of the playing (and paying) population that goes way overboard and spends $10k+. The entire point of getting other people to play is just to get the whales in the door.
Zynga has moved aggressively into mobile gaming and, from what I can tell, they're going to be successful there. If they stay strong there, their reliance on the FB platform will be less of an issue.
EA has a market cap of $7.68B so I see little issue with this market (granted, I no nothing of their specific financials so I can't comment on their valuation).
http://www.google.com/finance?q=NASDAQ%3AERTS