August 15th, 2011
With Zynga, Google+ Has Designs on Your Leisure Time
Now we know at least one way Google+ wants to be just like Facebook: a place for people to spend a lot of time playing games. Today, Google announced it’s creating a new Games button for Google+ profiles.
Google+ users will be able to play the games, but—having learned from Facebook that spammy game notifications are a bad thing—only see invitations, games and updates if they want to.
Social gaming was an early driver for Facebook, and built the fortunes of Zynga, which today filed an amended report in preparation for its initial public offering, revealing—among other things—that it has taken out a $1 billion line of credit as it prepares for its own IPO. Besides the Zynga game, other games launching on Google+ today include “Angry Birds,” “Diamond Dash” by game maker Wooga and “Bejeweled” by PopCap.
Zynga is the biggest developer of social games on Facebook, according to research firm AppData.com. The games are free to play, with the company making money by selling virtual goods as well as advertising in the form of branded virtual goods and sponsorships. Now that Zynga is also on Google+, its dependency on Facebook may continue to lessen. Google+ is a long way away from Facebook’s 750 million users, but at 25 million accounts, it’s growth has been explosive.
Zynga games are almost entirely played within Facebook’s ecosystem—a fact that has been a concern, even for Zynga itself. “Facebook is the primary distribution, marketing, promotion and payment platform for our games,” the company wrote in its most recent S-1 filing. “Any deterioration in our relationship with Facebook would harm our business.” Facebook takes a 30% cut—or tax—on every credit purchased by players. Each credit sells for 10 cents on the social network. Google and Zynga declined to disclose the terms of the deal.
To diversify its revenue streams away from virtual goods, Zynga is ramping up its work with brands. Major advertisers that have worked with Zynga include Coca-Cola, Amazon, HBO, Discover Financial Services, General Mills, Kraft Foods, McDonald’s, Target and Walmart. If Google+ can get even a portion of Zynga’s 232 million active players, it could provide a huge boost to the fledgling network.
Zynga, developer of Facebook games such as “Farmville” and “Mafia Wars,” originally filed the IPO on July 1 and stated in its amended report that in all of 2010, Zynga booked $597.5 million in revenue, up from $121.5 million in 2009.
Why the amendment? Zynga is staying quiet on the matter, but it’s possible that because of the volatility of the market, the company wants to assure the Securities and Exchange Commission and the investing public it has plenty of cash to operate. “There’s likely some hesitation on the part of the markets, so Zynga probably wants to be extra transparent,” said Paul Verna, an eMarketer senior analyst who focuses on social gaming.
The IPO will be managed by Morgan Stanley, Goldman Sachs Group, Bank of America. Merrill Lynch, Barclays Capital, JPMorgan Chase & Co. and Allen & Co. The company is backed by venture firms Foundry Group, Union Square Ventures, Kleiner Perkins Caufield & Byers, Institutional Venture Partners and Andreessen Horowitz. Russia’s Digital Sky Technologies and Google are also stakeholders.