How To Make $100 Million Selling $1 Products
By Anna Johnson on May 4th, 2009Have you heard of Zynga? It’s the company behind Facebook game, Texas Hold ‘Em, which attracts about 2 and a half million players a day. Zynga has annual sales of about $100 million, and most of it from gamers willing to pay a $1 per hour to play Zynga’s premium games or buy its virtual goods.
Yep, there’s a lot of money to be made in ‘micro-payments’. And maybe the recession has only helped companies like Zynga prosper…
According to The New York Times, about 45 million people across different social networks play Zynga games on a monthly basis. The bulk of them play on Facebook.
In fact, in April, Zynga passed widget maker RockYou, as Facebook’s top application maker, with 40 million monthly active users… or 20 percent of Facebook’s 200 million user base.
The New York Times reports that while Zynga also sell ads, most of its $100 million in revenues derives from just 2-10 percent of Zynga users who pay $1 an hour to play premium games or buy virtual goods.
It appears Zynga is prospering during the recession and I bet a lot of other companies selling ‘cheap thrills’ and ‘inexpensive luxuries’ are too. Is it any surprise that cheap iPhone apps are also selling so well right now?
Hard economic times don’t mean that people stop looking – or paying – for entertainment. Presumably, those doing it tough want to escape their reality more than ever.
But rather than spend a lot of money on holidays and big ticket items, they typically opt for smaller, cheaper pleasures. Which, among other reasons, is why selling fun products costing only a buck or two, is probably a good business to be in right now…
Source: Sarah Lacy, “Social Gaming Scores in the Recession,” BusinessWeek, April 30, 2009
