Google isn't particularly well known for keeping secrets, but according to TechCrunch the search giant has quietly pumped anywhere from $100-$200 million into Facebook developer Zynga to help develop a new "Google Games" web portal. If the rumor proves true Zynga would most likely play a key role in running the service, and provide Google with critical social graph information that would no doubt be beneficial in the development of "Google Me". The micro transaction approach taken in most Zynga products presents a huge revenue opportunity for Google in the gaming space, and would give them another application for Google Checkout, a PayPal competitor that has never gained any kind of critical mass.
Neither Zynga or Google responded to a request for comment, but branching out in this direction only makes sense for a company that recorded over $350 million in revenue during the first 6 months of 2010 and forecasts sales of over $1 billion by 2011. Even if you aren't a fan of Farmville, it's hard to not be impressed with Zynga's performance. With more than $500 million in seed capital raised over the last 12 months alone, we wouldn't be surprised to see virtual farms start popping up not just at Google, but even Yahoo or Microsoft portals as well.
It would appear PC Gaming is alive and well, and flash won't be going anywhere anytime soon. Sorry Steve.
Facebook was reluctant to setup a payment platform in the past due to security, resources, and third-party competitors. However, that’s all out the window and they have got their sights set on the big bucks now that they’ve teamed up with Zynga, makers of Farmville and Mafia Wars.
Zynga’s games have hooked over 75 million monthly active users, with a third of those people online harvesting or “pulling jobs” on a daily basis. Facebook’s plan is to pull a 30% fee off every transaction made using the Facebook payment structure. The virtual goods market in the US alone is forecasted to reach $1.6 billion dollars in 2010. $835 million of that comes from social gaming products, such as those developed by Zynga.
It is unlikely Facebook needed another revenue stream, but they aren’t going to ignore the low hanging fruit dangling from the social gaming money tree.
Facebook games like Farmville and Mafia Wars carry a rep for being diabolically addictive, but who knew they were just downright diabolical? Apparently, the productivity-whacking timewasters were birthed in a hive of scam and villainy. Straight from the horse’s mouth:
“I knew that I wanted to control my destiny, so I knew I needed revenues, right, f***ing, now. Like I needed revenues now. I funded the company myself but I did every horrible thing in the book to, just to get revenues right away," said Zynga CEO Mark Pincus. "I mean we gave our users poker chips if they downloaded this zwinky toolbar which was like, I don’t know, I downloaded it once and couldn't get rid of it.”
Fortunately, Pincus recently vowed to turn his games into sleaze-free zones, which will involve removing offers that ask for players’ addresses, phone numbers, and things of the like.
“We have worked hard to police and remove bad offers. Nevertheless, we need to be more aggressive and have revised our service level agreements with these providers requiring them to filter and police offers prior to posting on their networks. We have also removed all mobile ads until we see any that offer clear user value,” Pincus said.
As a result, other Facebook/MySpace gaming companies -- like Offerpal -- have begun cleaning up their acts as well. This is especially surprising for Offerpal, who – before a recent CEO switcheroo – was vehemently denying its involvement in any backdoor dealings.
Honestly though, people, if you willingly gave your address and phone number away to a game called “Mafia Wars,” you only got what was coming to you. Just sayin'.