Gaming giant Zynga has just filed with the SEC indicating a sale of $20.5 million in stock. Based on its recent acquisition of Austin-based social gaming company Challenge Games, we believe the transaction to be related to this deal. We reached out to Zynga and they would not comment on this.
It’s a safe assumption that the filing indicates that Zynga paid at least $20.5 million for Challenge Games. But there could have been additional cash involved, which would not be disclosed in this filing. Challenge Games, which is now Zynga Austin, launched in 2007 to focus on immersive Web game development built on a virtual goods business model. Backed by Sequoia Capital and Globespan Capital Partners, Challenge Games develops a number of social games including Warstorm, a collectible card game set in a fantasy universe, and Ponzi, a tycoon game. The company previously raised $14.5 million in funding.
Zynga is steadily building up its gaming empire through acquisitions and deals with major networks and web giants. Last week, Zynga signed a deal with Yahoo to feature its games throughout Yahoo’s network, which puts Zynga’s games in front of Yahoo’s 600 million users. The previous week, Zynga acquired Chines gaming company XPD Media and struck a branding deal with 7-Eleven. And the social gaming giant struck a five-year partnership with Facebook.
Zynga has a large war chest. The company just raised $180 million in funding from Digital Sky Technologies, Tiger Global, Institutional Venture Partners and Andreessen Horowitz in December. And Zynga is a profit machine, with yearly revenue estimated to be around $600 million. One estimate shows that Zynga is pulling in $15 million in profit per month. With that sort of cash on hand, $20 million-plus is chump change.