14 DAY TRIAL // Social networking may be growing at a huge pace, just look at Facebook's rise for 2009; yet, incredibly, social gaming is growing even faster. Facebook has 350 million users by now and is on track to make at least $500 million this year in revenue. But it's been at it for five years now. In the mean time, Zynga, the largest social gaming company around, is just two years old, has well over 100 million users, many on Facebook, and is reported to make $250 million this year.
Perhaps it's no surprise then that the same investors interested in Facebook are also pouring their coffers into Zynga. What may be a little surprising, though, is the fact that the said investor is Digital Sky Technologies, a Russian investment firm, and that it's buying a $180 million stake in Zynga at an unknown valuation.
Zynga is now the biggest social gaming company, an industry growing at an incredible pace, and is the rising star of the bunch though, now without its fair share of controversy in the recent “ScamVille” scandal. The company has been acquiring new users at a rapid pace and has been profitable for quite a while now. It hasn't released any revenue numbers, but it is said to be on track for a hefty turnover this year. Playfish, a smaller competitor, was recently acquired by faming giant EA for $300 million, and Zynga is likely heading for an IPO so there is quite a bit of interest in the company.
This interest has now spurred DST to invest $180 million in the company, a rather big sum that only companies like Facebook and maybe Twitter are seeing these days. In fact, the company has also invested about $300 million in Facebook at a huge valuation. It bought a $200 million stake directly from the social network, valuating the company at $10 billion and purchased a further $100 million-worth of stock from employees and investors at a lower $6.5 billion valuation. It's now making the exact investing scheme for Zynga as well, buying from the company directly but also shares from employees and other shareholders. This makes it a rare opportunity for employees to cash out on their shares before an expected IPO. There has been no official valuation, but experts estimate it to be from $1.5 billion up to 3 billion.