Deal Radar 2009: Zynga

We continue our focus on gaming applications for social networks with San Francisco-based Zynga. Founded in January 2007 by Mark Pincus, Zynga marries Pincus’s knowledge of social networks with his desire to create the next mass market video game phenomenon. Through his experience with Tribe Networks, which he founded in 2003, Pincus saw that the viral growth opportunity for games on social networks increased as these networks gained momentum.

He recognized that even if people have limited time they can go online, play a game and connect with friends and family in a fun and meaningful way. Further, Facebook and MySpace created a tremendous opportunity for social gaming by opening their platforms to third-party developers. Pincus, along with others, reinvented classic games such as bingo, Risk, poker and blackjack to tap into casual gaming. Zynga games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo!, the iPhone and iPod Touch, and include Texas Hold’em poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. And though the company has reinvented quite a lot of popular games, it has managed to steer clear of any copyright issues, unlike the Agarwalla brothers, who ran into trouble with their Scrabulous application and had to re-introduce the game as Lexulous.

Zynga users can add games to their profile pages and play with their friends online. The company taps into three revenue streams: advertising, user pay and in-game currency. The game currency is aimed at players who want to buy more chips in Texas Hold’em or more reward points in Mafia Wars.

In November 2008, Zynga created what they call the “first truly social game” for the iPhone—Live Poker. The game allows players to see which of their friends are online, and join them with just one click. Further, their recent partnership with Facebook Connect lets users play with friends who are on the iPhone, iPod Touch, or Texas Hold’em on Facebook. This integration helps players see how they rank among their friends. They’ve as also launched “Scramble Live,” and are continuing to develop iPhone games. Like Social Gaming Network (SGN), they are looking to tap into the iPhone as a social gaming device. The introduction of the Virtual Goods Platform on the iPhone has sent the game developers like Zynga and SGN leaping in joy!

Today, Zynga has more than 7.5 million daily users and more than 46 million monthly users. According to Adonomics, Zynga is the #1 application on Facebook with 4,746,219 active users out of 35,593,645 total users.

Zynga has raised $39 million in venture capital so far: a $10 million Series A from Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group and individual investors Reid Hoffman and Peter Thiel; and a $29 million Series B from Kleiner Perkins Caufield & Byers and IVP. The company is cash flow positive and is currently focused on enriching the game playing experience for its users.

Suggested Reading:

Building the Electronic Arts of Casual Gaming: PlayFirst CEO John Welch
Deal Radar 2009: Social Gaming Network
Deal Radar 2008: GirlSense

This segment is a part in the series : Deal Radar 2009