14 DAY TRIAL // While the large social networks are getting all of the attention with Facebook or Twitter constantly in the spotlight it's the developers who create apps for them that are raking in the money. While Facebook is struggling to break even, app developers, especially those creating social games, are making a very tidy sum 'selling' their free games. And it looks like the investors are noticing as app developer Playdom is raising an important amount of funding in an upcoming round as VentureBeat found.
The company is apparently looking to get funding in the double-digit millions at a sizable valuation of $100 million to $200 million which some are saying is doable. There aren't that many details available at the moment but the valuation doesn't seem that far fetched considering the solid growth the company and the entire social gaming sector have seen recently. In fact, Playdom is expected to bring in around $50 million in revenue this year and all of this by developing games that are essentially free.
But, while the games themselves don't cost anything, the company, just like everyone else in the market, is making a killing with microtransactions, a business model many believed was unfeasible just a couple of years ago. If users want to advance in any meaningful way in these games they have to pony up for virtual goods, which can be acquired using the game's virtual currency. The currency itself can be bought with cash or acquired through various advertising offers from partner companies.
Playdom isn't the largest player in the market but dominates on MySpace where it has three of the top five games and eight in the top 25 and has currently moved rather successfully to Facebook where it’s making inroads fast. The company claims it has 28 million monthly active users across all platforms but it hasn't disclosed how they are distributed. Zynga, the largest player in the market, boasts 129 million monthly users and is on track to make $200 million in revenue this year.