Social Gaming Industry News Roundup Week of August 9, 2010

The San Francisco Business Times today published a story on hi5's transition into the social games industry. Patrick Hoge interviewed hi5 President and CTO Alex St. John last week, discussing the current state of the industry, key players in the space, current challenges that developers face, and the opportunities that hi5 sees. Patrick quotes Alex discussing hi5's approach to building an online social environment centered around games: "St. John said hi5's strategy is to become the 'playground' where people using both real and assumed identities can socialize around games. While not developing its own games, it will use 'addictive' gaming features like 3D avatars in Flash programming, a store for virtual goods and gifting, he said. 

Last week, for example, hi5 started selling 'prank' gifts in which a user's avatar can be dispatched to do mischief on other users' homepages -- like smashing what appear to be holes in their computer screens with a baseball bat." To read the full article, visit the San Francisco Business Times.

GoogleLogo.gifGoogle has been headlining in the news over the last couple weeks with their recent acquisition of social app developer Slide for a reported $228 million, and rumored developments of a social network for games called Google Me. This week, TechCrunch reported that Google purchased Jambool, creators of the payments platform Social Gold, for $55 million with another $15-$20 million in an earnout. Social Gold enables developers to monetize their social applications through direct payments, and was founded by Amazon veterans Vikas Gupta and Reza Hussein. Additionally, it was reported that Google Ventures, the venture capital arm of Google, supposedly made an estimated $3-5 million investment in popular iPhone games developer ngmoco. The investment reportedly valued ngmoco above $100 million, and this comes on top of a $25 million Series C round ngmoco closed in February this year. 

Zynga pulled Farmville from MSN Games portal this week. Just this past February, in the midst of a fairly public battle with Facebook, Zynga announced that is would be bringing Farmville to MSN in an effort to diversify away from Facebook platform. According to figures from AppData, FarmVille has lost more than 20 million users in the past four months since Facebook enacted changes to its app notification system. Although Zynga hasn't yet explained why the game was pulled from MSN, this isn't the first time one of the studio's popular titles has disappeared from a site. Three months ago, it announced the removal of YoVille from teen-targeted social network Tagged. Zynga also announced earlier that they would be partnering with Yahoo! Games, and Farmville is still not available on the portal, so it's unclear if it is still coming to Yahoo! and whether Zynga will continue to bring the title to networks outside Facebook.

emarketer_socialadsspending.gifeMarketer expects that marketers will spend $220 million worldwide to advertise in social games and social applications in 2010, supposedly increasing 60% in 2011. In the US alone, those numbers total $142 million in 2010, and an estimated $192 in 2011. While the dominant revenue stream for many social games has been the sale of virtual goods, it's clear that there is a lot of opportunity with advertisers as well.

Just a reminder that next week (August 16-18), hi5 representatives will be attending GDC Europe in Cologne. If you're interested in meeting with our team during the conference, please contact us to request a meeting: