Farmville is one of thousands of games offered on the social networking site Facebook. Somewhere, someone's crops are dying — virtually, at least, in the countless acres of digital land harvested daily by some of Farmville's nearly 62 million users.

The game is Facebook's largest, one of thousands offered on the popular social networking site. And traditional non-gamers are playing in droves. Facebook estimates more than 200 million of its users play its games each month.

For companies like Zynga, Farmville's developer, that kind of audience translates into impressive revenue figures. Research firm Screen Digest estimates that social gaming worldwide is expected to reach $826 million this year, with more than half of that — as much as $500 million, according to the New York Times — coming from Zynga games.

Those numbers still pale in comparison to the nearly $20 billion in revenue from traditional console, PC and handheld games in 2009, according to U.S. research firm NPD. However, it's enough for companies like Electronic Arts, whose studios are responsible for the Battlefield and EA Sports franchises, to take notice.

Last November, EA purchased British developer Playfish for $275 million, hoping to augment its video game lineup with additional social and casual games.

"We consider there are two types of gamers," explained Playfish co-founder and chief operating officer Sebastien de Halleux. "One enjoys the social interactions that come with games, [where] friends come first and games come second. And then you have people who are more hardcore."

That hardcore audience is where EA's traditional source of income lies. However, with the company suffering losses of $677 million during the 2010 fiscal year, it's clear why it's looking for ways to revamp its strategy.

Social attraction

Sebastien De Halleux contends that the downfall of traditional developers has been the assumption that gamers want to play online with strangers. De Halleux contends that the downfall of traditional developers has been the assumption that gamers want to play online with strangers — the basis of services like Xbox Live or the Playstation Network. Social gaming, however, turns this idea on its head, ensuring that you only play with the people you know, and who are often your closest friends.

EA's acquisition of Playfish is not a unique strategic move. In late July, Walt Disney Co. acquired social game developer Playdom for nearly $600 million. The deal, Playdom CEO John Pleasants enthused at the time, was a "once-in-a-generation opportunity to transform the way people of all ages play games with their friends."

Or, at the very least, it could transform the way game studios make money.

Unlike traditional console or PC releases, revenue for social game developers comes not from the purchase of the game itself, but from thriving in-game economies.

Hotel City, one of Playfish's flagship games, offers various gameplay items in exchange for Playfish credits. Twenty-five of these credits can be purchased for $5 US, or users can complete special partner offers for in-game cash.

Shifting market

But as successful as this formula has proved thus far, the industry has seen trends in recent months that have some observers wondering where social gaming will go from here.

'At Google, we're committed to making the web more social, including helping third-party sites add social functionality as well as giving people new ways to interact within our own products.'—Wendy Bairos Rozeluk, Google

Zynga's Farmville, which peaked at 85 million monthly active users in March, is now down to nearly 60 million. Other popular games, like Mafia Wars and Treasure Isle, have also seen drops, though on a much smaller scale.

The decrease has been largely attributed to changes in the way Facebook's messaging and invitation systems work, which has reduced the viral spread of new users. Many of the platform's users do not actively seek out games to play, but are instead invited by friends and family.

However, some are predicting it's only a matter of time before the social networking demographics begin to shift. It's long been rumoured that Google is planning its own foray into social networking with a product tentatively called Google Me, which could fragment the market.

The Mountain View, Calif.-based company has been making acquisitions in this space for months, the most recent being Toronto-based startup Social Deck. The developer has been described as "a social gaming company that enables simultaneous, viral multiplayer game play across multiple mobile devices and social networks."

"At Google, we're committed to making the web more social, including helping third-party sites add social functionality as well as giving people new ways to interact within our own products," Google spokesperson Wendy Bairos Rozeluk said of the recent acquisition.

"Social Deck is a perfect addition to our current team of engineers in Waterloo who continue to innovate in the social and mobile web."

A Google-branded social network, if deployed, could pose a serious challenge to Facebook's dominance. That could make things more complicated for social gaming developers who are trying to attract huge audiences. But considering the search giant's influence worldwide, it could also work to extend social gaming to an audience that traditional networks have failed to reach.

For example, almost half of American social gamers are over 50, according to a survey by social and casual game developer PopCap — a market well outside Facebook's 18-to-35 demographic, the largest on the network.

"We can only be successful once we manage to create categories and games that are meaningful to every web user," de Halleux said. "Movies, music and books have achieved this, and there's no reason why games can't."

But it will take a lot of work, he cautioned. And in the real world, there's more at stake for the game industry than wilted crops.