Deal Radar 2009: Social Gaming Network

Deal Radar continues to present bootstrapped companies in the growing online gaming segment. Founded in 2007 Social Gaming Network (SGN) offers gaming applications exclusively for social networks. The company was spun off from Webs (formerly known as Freewebs) by founder Shervin Pishevar, who was also the founding president and COO of Webs. The idea for SGN came with the success of Warbook, a medieval role playing game for Facebook, at Webs.

Since its inception, SGN has become one of the largest publishers and developers of games for social networks and the iPhone. While other competitors were concentrated on DAU (daily active users, a metric used by Facebook to rank apps), Shervin wanted to create games with robust user pay models. He felt that it would be viable to generate revenue from both advertising and user pay for in-game items or advantages.

The company penetrated the market by becoming an aggregator of games developed by independent developers, using cross-promotion and a shared ad network to create revenue-generating economies of scale it could not have accrued on its own. Once SGN established itself as a leader in social gaming, it began focusing more on the quality of games than aggregation, incubating all games in-house.

The company decided to develop games for the iPhone in the fall of 2008. iFun was launched late in 2008 and brought together mobile and PC gaming. SGN used the accelerometer technology in the iPhone to link the handset to a computer via wireless or 3G connections to make the iPhone into a Wii-like controller for the game. It plans to continue with this convergence and make it increasingly seamless. This ability to play games on mobile devices or on a PC (through social networks) while tapping into the social networks’ viral distribution channels differentiates the company from many of its peers.

SGN’s market is fairly large, with sites like Facebook (124 million users) and MySpace (114 million users) being a perfect channel into the market for social games. Though the average game typically targets the 18- to 34-year-old male user, it is important to note that almost everybody plays games. Casual gaming is generally more evenly balanced between male and female audiences. As mentioned in yesterday’s article, the Casual Games Association estimated that the market for casual games reached $2.25 billion in sales in 2007.

To date, SGN’s games on the iPhone have generated more than 10 million downloads, with at least one game on 15% of iPhones and iPod touch devices. SGN’s most popular game, iBowl Live, launched in October 2008, was the number four iTunes application of 2008. (fluff) Friends (also available as i(fluff) on the iPhone), a virtual pet game, has generated millions of dollars since its launch. The company, however, did not divulge details on pricing or revenue.

SGN was initially bootstrapped out of Webs.com. It then raised a $15 million Series A from Greylock Partners, the Founders Fund, Columbia Partners, and Novak Biddle Venture Partners in May 2008. Further, according to a July 2008 article in CNET, SGN is also said to have raised an undisclosed amount of funding from Jeff Bezos’ personal investment firm, Bezos Expeditions.

Related Reading:

Games: From Donkey Kong to Dominance
Deal Radar 2008: Challenge Games
Deal Radar 2009: Mytopia

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