Google is secretly investing in the massive social gaming company, Zynga
Google is investing between $100m and $200m in social gaming market leader Zynga, paving the way for a ‘Google Games’ launch later this year. News of the investment was revealed today by digital media blog Tech Crunch, although a recent tweet from Zynga’s chief engineer, Allan Leinwand, suggests the deal may have closed up to two months ago. The tweet was later deleted.
Zynga is without a doubt the world’s most successful social gaming company. Facebook regulars will be more than familiar with its popular FarmVille app, which attracts more than 62m active users every month on the social network.
The company claims about 237m active users each month across its entire stable of games, which also includes Zynga Poker, Mafia Wars and Café World. The games are currently available on Facebook, MySpace, Yahoo and iPhone, but it is the Facebook connection which Google may be most interested in.
The success of Zynga’s games has allowed Facebook to build a massive social graph, collecting social data from users while they are logged into games. A partnership with Zynga would enable Google’s rumoured Facebook rival, ‘Google Me‘, to make similar use of this facility, allowing Google to build a social graph of its own; enhancing its advertising potential and consolidating its reputation as an internet giant.
This Google Zynga deal could be bad news for Paypal. Zynga is said to be Paypal’s single largest customer and Google are no doubt looking to step in with Google Checkout as a replacement for Zynga’s Paypal payment processing.
Zynga is apparently set to make at least $1bn in 2011, according to TechCrunch sources. Despite its huge profits, Zynga has accepted a series of large investments over the past year. Aside from the Google deal, the company raised USD150m from Softbank Capital last month, and USD180m from venture capitalists including Digital Sky Technologies, Tiger Global, Institutional Venture Partners and Andreessen Horowitz.
What do you think? Is this a smart move for Google?