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Intel, Time Warner And The9 Make $23M Strategic Investment In Social Gaming Company CrowdStar

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Social gaming company CrowdStar has had an impressive run of competing with giants like Zynga, EA and Disney with only $100,000 in funding. The company is the fifth largest social gaming app developer on Facebook with 29 million monthly active users. But today, CrowdStar is gathering more financial resources to take on its competitors, raising a whopping $23 million in strategic funding led by Intel Capital, Time Warner Investments with participation from China’s The9 and media mogul Aviv Nevo’s NVInvestments.

CrowdStar, which is best known for producing Facebook social games Happy Aquarium, It Girl, Happy Pets and Mighty Pirates, recently brought on Peter Relan, as its new CEO. Relan is actually the creator of incubator YouWeb (where CrowdStar first received funding), but stepped into the CEO role recently after a number of employees left the startup with its change in strategy. The company is also revealing that it had its largest quarter of revenue in Q1 2011.

As Relan recently told us, CrowdStar is focusing on three main avenues to expand in the coming year—international availability of games, through mobile development and through talent acquisitions. The startup is currently seeing 50 percent of its traffic coming from international markets and Relan believes that this number will only continue to grow. In fact, an investment from Chinese gaming company The9 should help the company pursue an international strategy, especially in high growth areas for gaming such as China and Japan.

Mobile is another area where CrowdStar plans to expand to with its new funding, with new social gaming products incorporating location into the gaming experience. CrowdStar’s mobile games will also have a lot more focus on push notifications and will also monetize in a slightly different way from the Facebook economy. Relan says that monetization will still be around virtual goods, but the economic designs are different on mobile apps.

In the next few weeks, CrowdStar will launch a new game on iOS, that involves fashion and shopping. For now, Relan says CrowdStar will be focusing on development for iOS but will eventually expand to Android as well. In the second half of the year, CrowdStar plans to launch mobile games that involve location and avatars, but Relan declined to give further details on the launch.

And some of the new funding will be used add about a hundred employees particularly game developers, server developers, artists, producers, business analysts and content managers. CrowdStar currently has 100 employees, and will double it’s staff. Relen says that he’s open to small talent acquisitions in mobile and social gaming studios as well. The company recently made a key hire— former Glu and Transpera executive, Alex Galvagni, as the Head of Studios.

For CrowdStar, Intel, Time Warner and The9 are all interesting investors, considering the company’s future strategies listed above. Intel Capital actually invested in CrowdStar’s sister-YouWeb incubation, OpenFeint, which was acquired by Japanese gaming company GREE for $108 million. Intel and CrowdStar plan to work together to expand social gaming onto mobile platforms.

Intel Capital managing director Mike Buckley, said this of the investment, Social games are a fast growing category on connected computing devices and we believe CrowdStar is well positioned to continue to capitalize on this trend.

Time Warner’s investment will brings a library of high quality, branded IP to partner with in the social games arena. Relan tells me there’s a slot of opportunity to partner with media and entertainment brands for in-game marketing deals (Zynga just did one with Lady Gaga). For example, It Girl has hit TV Show ‘Gossip Girl’ integrated with its virtual goods store. Rachel Lam, SVP and Group Managing Director of Time Warner Investments, explains, Time Warner’s unique IP franchises and extensive media resources coupled with a social games leader like CrowdStar has the potential to truly impact the way consumers engage in social gaming. And Aviv Nevo, an early backer of The Weinstein Company and the largest individual shareholder in Time Warner, should be able to open his rolodex to CrowdStar for additional entertainment partnerships.

And, a partnership with The9, which also invested in OpenFeint, will help CrowdStar to enter the Chinese marketplace, a major goal for the Company, as we mentioned above.

As we’ve written in the past, 2011 will be a critical year for CrowdStar. Relan tells us that CrowdStar is making moves to move from a Facebook-dependent gaming company to becoming an independent social gaming platform. Competitor Zynga is rumored to be raising $500 million in funding in advance of an IPO. EA and Disney are also looking to dominate in the social gaming space with their respective acquisitions of Playfish and Playdom. But CrowdStar is wise to consider other platforms, branding opportunities and international markets as resources to propel growth.