14 DAY TRIAL // If there was any doubt that social gaming has hit the big time, it was dispelled recently when gaming giant EA acquired Playfish, one of the top players in the market, for $400 million, taking some people by surprise. It may turn out to have been a bargain for EA as the biggest name in social gaming, Zynga, is getting valuation estimations at the $1 billion mark and may be headed for an IPO next year, though the company dismisses any talks about going public for the foreseeable future.
The sum had previously surfaced with talks of a possible acquisition from EA. The gaming company eventually decided to go with the cheaper version buying Playfish for about three to four times its yearly revenue. Now Bloomberg cites several analysts who believe that the social gaming company may well be worth $1 billion and may hit that mark if it aims for an IPO mid-2010. This would make it the third-biggest video gaming company in the US, not bad for a company founded just a couple of years ago.
Zynga is the biggest social games publisher by a fair margin and has just announced reaching $100 million unique monthly users. It also gets about $200 million monthly active users across all the social networks it operates. That's a massive number considering that the largest social network in the world, Facebook, is at about 325 million users and is headed for 350 million by the year's end.
Revenue-wise, Zynga is said to be on track to make slightly above $200 million this year and somewhere around $355 million next year. The company hasn't released any official numbers, but the revenue figure for this year is thought to be fairly accurate. For 2010 though, it's hard to make a solid prediction as the market is still very young and very volatile, so growth for the next year is hard to estimate.
The company, along with the entire social gaming industry, has been surrounded by some controversy lately, being accused of running ads and offers from companies with less than admirable intentions. Zynga was recently hit with a class-action lawsuit over these “offer ads.” The company now claims it has cut down on that form of advertising and that it only made up 10 percent of its revenue, though others estimated the figure to be at about 30 percent.