Google buys into social gaming with $200m investment in Zynga
Techcrunch reported over the weekend that Google has ‘quietly’ invested between $100-$200m in social gaming business Zynga, noting that Zynga’s product portfolio would give Google a solid base of games on which to launch Google Games later this year, as well as the potential to build the coveted social graph, and an excellent platform from which to provide a boost for Google Checkout.
Zynga, which is reported to have over 235 million active users a month, owns 6 of the top 10 Facebook games including Farmville and Cafe World. Some had predicted that Zynga’s earnings would climb to more than $450m in 2010, but the same Techcrunch sources are predicting revenues of $350 million for the first half of 2010 (half of which is operating profit), and that that figure will likely climb to at least $1Bn in 2011.
In April, the company issued shares that valued the business at $4Bn, and as recently as May, the company reported that it had entered into a five-year strategic relationship with Facebook that increased their shared commitment to social gaming and expanded use of Facebook Credits in Zynga’s games.
@Gordonmacmillan adds – It will be interesting to see if this investment in Zynga has any connection or implications to the rumoured social network that Google is working on that is said to be called Google Me.
As beyond Google Games plugging in social gaming is clearly key to the success of any social network. Petville and Farmville (not to mention the growing numbers of other villes – Frontville and Yoville) have been huge and sticky for Facebook, and although numbers are said to have fallen slightly, it has around 80 million players with more coming as Zynga pushes ahead with plans to expand to mobile platforms where it can generate even more cash as people splash for yet more virtual creatures.
Google clearly knows that it needs something more than connections to bring people to any successful social network that it develops — taping into social gaming would give it access to that kind of content.
Neil Perkin is the founder of Only Dead Fish and you can follow him on Twitter, and read his blog here.
All Comments
Pretty cool; two hobbies coming together.
That said, my mind automatically turns to the implications for marketing. It means Google’s social networking data will soar and so functions like the social search recommendations become even more important. I also suspect we’ll see this cross the bridge to Android and we’ll see more mobile social gaming (probably just in time for Foursquare 2.0).
The mobile play in all of this is going to be really interesting particularly with last week’s news that Foursquare is pushing forward with its gaming strategy.
Very exciting news, i think it will be fascinating to see what happens with social gaming over the next few years.
I’ve written up how some commentators think the principles behind gaming can be applied more broadly here;
http://planningfallacy.blogspot.com/2010/06/can-real-world-learn-from-video-games.html
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