Exclusive: Playdom Raises A Huge Round At A Huge Valuation

Michael Arrington

J. Michael Arrington (born March 13, 1970 in Huntington Beach, California) is a serial entrepreneur and the founder of TechCrunch, a blog covering startups and technology news. Arrington attended Claremont McKenna College (BA Economics, 1992) and Stanford Law School (JD, 1995) and practiced as a corporate and securities lawyer at two law firms: O’Melveny & Myers and Wilson Sonsini Goodrich... → Learn More

Wednesday, November 11th, 2009

It’s only a day after one of the big three social game developers, Playfish, announced a $400 million acquisition.

And today we’ve confirmed that another one, Playdom, has done its own massive deal: $43 million on a $260 million pre-money valuation. New Enterprise Associates, Rick Thompson, Lightspeed Venture Partners and Norwest Venture Partners invested in the round.

This is Playdom’s first outside round of funding.

Unlike Zynga and Playfish, who focus on Facebook, Playdom’s is the big player on MySpace. Their Mob Wars game has 14 million or so users there, and the company is likely pulling in $60 million or more in reveune. A couple of weeks ago we compared the big three social gaming companies as a prelude to our Scamville posts.

Playdom has 28 million monthly game users. 60% of traffic is from MySpace v. 40% from Facebook. They have twelve MySpace apps and 6 Facebook Apps.

Playdom is enemy no. 1 to Zynga, and has been accused by Zynga of stealing employees and the company’s intellectual property. Of course, no one’s hands are clean in this business.

70% of Playdom’s revenue comes from direct payments, the company says, 10% is advertising and 20% is offers. For offers, they work with usual suspects. But they have banned the spammier stuff, like mobile subscriptions.

One thing’s for sure. Zynga has more users of its games than Playfish and Playdom combined, and they tend to monetize far better, too (at least until last weekend). It’s not unreasonable to imply a $1 billion valuation to Zynga based on these comps. They’ll be looking to the public markets, though, for their exit.

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