The global virtual goods industry put up some very impressive numbers this year. From special Easter eggs to virtual ad campaigns, virtual goods sales have grabbed their share of headlines over the past twelve months. Now with social gaming on the rise and everyone from your teenage nephew to your grandma to your old rugby teammate buying a “little something” to sweeten their online game, here is a look a back at the year in virtual goods sales.
$7,300,000,000: expected global revenue generated by the virtual goods industry in 2010. This is huge, considering the $60 billion generated in 2009 by the video game industry as a whole, and clearly shows that browser-based gaming is making great strides.
$2,100,000,000: The projected size of the US virtual goods market in 2011. → Read More
So there was this guy named Ken who was working a 9-to-5 at some giant software company writing tons of code for something whose importance and value was exceeded only by its monotony. Ken’s wife, Roberta, had been playing some newfangled PC game and thought to herself, “Man, this game sucks! Ken and I should totally make a better one!” The husband-and-wife team then worked nights and weekends for three months building a game. The final product? Mystery House. And it was awesome.
On the heels of this success, they raised money, made more hit games, and eventually sold their gaming empire for $1.5 billion. For those of you who aren’t familiar with this story, it could just as well be the founding story of a Playfish or a Zynga today. But this is the story—or my version of it—of the founding of Sierra Online back in the ’80s.
It was an exciting time back then. Technology had enabled game developers to develop new game mechanics and immerse players in new worlds in ways that had never been imagined before. And the best part? A husband-and-wife team could work nights and weekends and knock out a meaningful and entertaining game in three months. → Read More
We track a lot of acquisitions on CrunchBase. At the beginning of 2009, acquisitions were at a standstill. But as the economy begrudgingly roused itself from recession, the deal flow started to pick up in the summer, and then rebounded more in the third quarter. There are still a couple weeks left in the year, and a lot can still happen, such as Google buying Yelp for more than $500 million. But with the year wrapping up, we put together an initial list of the top technology acquisitions of 2009.
We’ll update the list if necessary at the end of the year (for instance, we don’t include Yelp in our list because it is not yet final), but it is not likely to change by much. Out of $64 billion worth of technology M&A Crunchbase tracked in 2009, about $54 billion went to the top 30 deals ((see table below). These are only technology deals (Web, software, hardware, mobile) and do not include cleantech or biotech (nor do they include other industries Crunchbase tracks as well).
See the list after the jump. → Read More
Every year the World Economic Forum picks a couple dozen or so up-and-coming technology startups from around the world and dubs them Technology Pioneers. In the past, Technology Pioneers have included Google and Mozilla. Last year, Mint, Etsy, and Brightcove joined the club.
Today, the World Economic Forum is naming 26 Technology Pioneers for 2010. They include Twitter, Amiando, Playfish, Obopay, Innovid, Bloom Energy, and Boston Power. Twitter probably should have been named last year, before its huge growth spurt, but better late than never.
Amiando, based in Germany, is an online ticket service which is going gangbusters. (It competes with Eventbrite). Playfish is a social gaming company based in the UK, which was recently bought by Electronic Arts for $300 million. → Read More
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. → Read More
After lengthy negotiations, Electronic Arts closed it’s anticipated acquisition of social gaming startup Playfish for $275 million in cash. An additional $25 million in stock will be set aside for retaining the top talent at the startup, and another $100 million in earnouts are part of the deal as well if the business hits certain milestones. So the total value of the deal could amount to as much as $400 million when all is said and done. Although, earnouts have a tendency to come up short (see Skype).
Playfish is based in London, and has raised $21 million from Accel Partners and Index ventures. The Accel investment is from its European fund.
Last year at a presentation at the Founder’s Forum in Hampshire, England, CEO Kristian Segerstrale put up a slide with a dinosaur and expressed his desire to “kill EA.” Now he’s joining them instead. Funny how that works. → Read More
So much for the first generation of big Facebook/MySpace social application startups. Slide and RockYou both got huge valuations in venture rounds. But a new generation of application developers has taken center stage and are racking up big revenues and their own eye popping valuations: Zynga, Playfish and Playdom.
All three own popular social games on Facebook and MySpace. Zynga’s Farmville has 61 million monthly users. Playfish’s Pet Society has 21 million monthly users on Facebook. And Playdom has 16+ million monthly users of Mobsters on MySpace and Facebook Combined.
All three companies are getting a ton of press and investor attention. Zynga wants to go public next year. Playfish probably already got bought by EA for $400 million or more. And Playdom probably raised an unannounced big chunk of venture capital over the summer.
These three companies may be generating as much as $300 million annually on sales of virtual goods. Need a shotgun to do that next job on Mobsters? No problem. Pay with a credit card, paypal, or your mobile phone and it’s all yours. And people are obviously very willing to buy these virtual goods. Nothing new there.
The goal of all of these games is to get to a higher level, and generally have more fun growing things or killing things faster than your friends. Get addicted to the free version, then start spending to move things along more quickly. Once people are committed, it’s easy to get them to pay. You can read all about it on Business Week.
Except Business Week didn’t mention the dark side of the business at all. → Read More
Last week we reported the rumors that VC-backed Playfish, the social games startup which has had phenomenal growth, was in the process of being acquired by games giant Electronic Arts for $250 million. However, nothing was confirmed at the time, and despite several press reports to that effect none of the companies involved has made a sound. And most observers were startled as Playfish had not looked like it wanted an early exit by any stretch.
In fact, we’ve learned that Playfish is still in play, and in all likelihood EA leaked the $250 million figure as a negotiating tactic. Our sources say that Playfish is holding out for another offer, somewhere between $350m at the low end and $500m at the top end, either from EA or another suitor. Independently, Inside Social Games has uncovered similar chatter. → Read More
When I wrote my BusinessWeek column on Zygna a while back, every venture capitalist in the Valley told me that Playdom was the company’s biggest competitor.
After all, it competes game-to-game, with similar mob-style and poker games, and was said to be doing the same revenues as Zynga with much higher profitability. (As my column pointed out, Zynga’s revenues are more like double Playdom’s—and since I’ve heard the discrepancy is even greater.)
As you’d expect Zynga’s CEO Mark Pincus pooh-poohed Playdom as any sort of threat. But tellingly, he said the company he was worried about was UK-based Playfish. So, while I was across the pond, I decided to see what the fuss was about and sat down with Playfish’s founder and CEO Kristian Segerstrale. I came away convinced this was one of the hottest companies to watch in the UK. Here are five reasons why. → Read More
Casual gaming on the Web is quickly moving to the social networks, where people can play with their friends. Just this week, multiplayer casual games site Geewa launched three of its most popular games on Facebook: 8-ball Pool, Backgammon, and Reversi (which is the same as the board game Othello).
Geewa, based in Prague (disclosure: it is a sponsor of an upcoming Crunch Meetup there) , is making some unique moves in the multiplayer casual game space. Namely, Geewa’s games are live, head to head games, also known as synchronous games. Most multiplayer games are asynchronous, like chess, where each player takes a turn at their leisure. Synchronous games happen more or less at the same time, with players moving in parallel and comparing scores after each round (“Who has the Biggest Brain” is a typical example).
Another nice feature of the Geewa games is that they allow players to challenge their friends via Facebook chat directly to play a live game. So now you can really play against your friends instead of playing with random people → Read More
Over the past year video games have begun invading every computing platform, from social networks to mobile devices. They’ve also been picked up in the portfolios of a number of firms.
London based Playfish has just raised a $17 million series B round led by Accel Partners and Index Ventures. Kevin Comolli, from Accel Partners and Ben Holmes from Index Ventures, will both join its board of directors. The company plans on putting the funds toward hiring for their 4 international offices and expanding their reach to other platforms.
The new round combined with a $3 million seed and $1 million bridge financing, makes Playfish one of three social gaming startups to take in $20 million or more in financing (Zynga – $39M, SGN – $20M). Playfish differs most from these competitors in its highly polished in-house game development. I’d call it the Wii of social gaming companies. → Read More
If you glance at the top lineup of gaming applications on the Facebook or MySpace platform, you’ll notice an interesting fact. Not one is the product of a major gaming publisher. Instead a group of independent gaming startups have been the leaders in publishing games within social networks. Co-founders of the gaming publisher Playfish, Kristian Segerstråle and Sebastien de Halleux, chalk up the growth to a profound platform shift social networks have introduced into the gaming marketplace. Traditionally, large publishers have lorded over the $50 billion gaming industry by controlling two things: access and distribution. Be it a console game or the latest PC title, only big companies could shoulder the large costs of distribution deals and advertising involved in bringing a game to market. Social networks, however, have are an open platform that give away both access and distribution for free (the CBS backlash is an exception that proves the rule). You may already recognize Playfish from their flashy Facebook games: Who Has The Biggest Brain?, Word Challenge, and Bowling Buddies. The games have a very similar look and feel to the popular Wii, especially their latest game, Bowling Buddies. Playfish developed the 3 games over the past 6 months and has grown to about 6 million monthly users playing an average of 30 minutes a session. The team attributes this to the social infrastructure that both makes the games more enjoyable and easier to spread. For some perspective, EA’s Pogo.com claims about 14 million visitors per month and has been around since 1999. For the large part, big gaming publishers have only stuck a toe into social networking. Gaming giant EA’s most notable release to date has been the official version of Scrabble, which currently has around 7,000 DAU (it’s also limited to USA and CAN). However, there’s certainly more to come as these networks watch startups work out the kinks. EA has already done some major releases on the iPhone and has larger plans for their latest acquisition, Rupture. Comparatively, Playfish commands 3 of the top ten gaming apps on Facebook, totaling around 1 million daily active users. The others are belong to notables include SGN, Zynga, and Serious Business. But traditional gaming companies have been beating the startups on one key metric, monetization. PC and console games saw sales up 43% last year to $18.8 billion. Onine gaming is currently a $1 billion a year business. → Read More
