Zynga’s decision to pay $210 million for Draw Something, and the game’s subsequent rise and fall, appear to expose a fundamental flaw in the social gaming company that should frighten investors, and be setting off alarm bells in the company’s headquarters.
As you can see in the chart on the right, Zynga’s daily user count spiked to almost 70 million users, up from ~58 million users, after acquiring Draw Something developer OMGPOP.
However, the buzz for Draw Something has worn off, and now Zynga’s total daily Facebook-connected users are back to around 58 million.

Read more: http://www.businessinsider.com/zynga-2012-5?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_term=Business%20Insider%20Select&utm_campaign=Business%20Insider%20Select%202012-05-08#ixzz1uLt3sulu

See on www.businessinsider.com

Japanese gaming giant GREE just acquired mid-core, mobile game developer Funzio for $210 million in an all-cash deal that should boost its ability to build games for Western audiences.

Funzio is behind Crime City, Modern War and Kingdom Age, which are graphical RPGs that have had more than 20 million downloads on Apple’s iOS, Android or Facebook platforms.
I had heard a few weeks back that Funzio was in a fundraising process at a $350 million post-money valuation and had also been loosely talking to various buyers in an auction-style process. Apparently, the fundraising efforts helped tip Funzio into a sale, but maybe not at the valuation I had originally heard about. Still, $210 million is not bad at all, considering that the company had raised about $20 million to date from IDG Ventures and Playdom co-founder Rick Thompson. For comparison, Draw Something-maker OMGPOP went to Zynga for $180 million in cash plus an undisclosed earnout.
Why did GREE buy Funzio? GREE is a multi-billion dollar mobile gaming company from Japan that is trying to break into Western markets. Its profit margins put Zynga to shame, but the company is running out of room to grow as its home country becomes saturated. GREE bought a gaming network OpenFeint for $104 million last year as part of that effort.
But the thing about GREE is that it is a dual platform provider and game developer, so OpenFeint only really addressed one side of its needs. OpenFeint was the platform and GREE needs in-house development capabilities, for which it has been hiring very aggressively in the Bay Area. Funzio should help with this after GREE scouted many targets over the past few months. Early-stage talks with at least two other game developers and platforms didn’t work out for various reasons. They had also looked at OMGPOP, but didn’t move fast enough because Zynga’s chief

See on m.techcrunch.com

While it’s going to be a long while before anyone gets within striking distance of Zynga’s dominance when it comes to social games on Facebook, the fight for the number two position on that site is a fierce one, when it comes to daily active users.

Three companies are battling for the silver medal — Wooga, Electronic Arts and King.com. EA’s held the lead for a while, but earlier this month King.com broke away from the pack, largely on the strength of its Bubble Witch Saga game.

As it looks to extend that lead, the company is also focusing on what’s next. And for now, the field is fairly wide open. The Saga series is likely to continue growing — and there are other games the company can move over from its Web-based game series. Acquisitions aren’t out of the question. And there’s even some chatter about a possible IPO.

That ‘going public’ talk started around the top of the month, when the company’s CEO and co-founder Riccardo Zacconi told Reuters he was “preparing the company” for a possible offering, even though it would be at least next year before it made that step.

Alex Dale, King.com’s chief marketing officer, seemed to take a step back from that in a recent conversation with Gamasutra, however.

“We have done some internal reorganization to take that [IPO] option if we want to or need to, but there are no specific plans and that is not a focus for the company.”

Right now, the focus for King.com is on growth, both in terms of daily and monthly average users, as well as financially. King.com bought its first external studio a little over a month ago — Fabrication Games in Stockholm. And as consolidation becomes more common in the mobile and social space, prices are sure to rise.

EA’s $750 million buyout of PopCap Games nine months ago (with incentives that could drive the price to $1.3 billion) and Zynga’s recent $180 million purchase of OMGPOP have inflate the market — and if it wants to keep its lead, King.com has to be able to compete with those sorts of bids.

Dale didn’t discuss the size of the company’s war chest, but said King.com is happy with its growth.

“The profitability is good,” he says. “The business models are good. We are growing revenues fast — and by that, I mean high double digits — and we’re investing in developing new games.”

Profitable since 2005, King.com has diverse lines of income — social games on Facebook and mobile (both of which draw from player microtransactions) and web-based skill tournaments, where player can make small wagers of 10-15 cents (which supplements the advertising income).

“We’re coming from business model ‘A’ and we’re adding both ‘B’ and ‘C’,” says Dale. “If you play Bubble Witch Saga on Facebook, that’s a very relaxing experience. It’s competitive, but in a gentle way.”

But he adds, “The same game mechanic on the tournament side is different. If you play Bubble Witch on King.com and you’re playing for a cash stake, it adds a competitive edge.”

While King.com has been around the games world for nine years, it was the move to Facebook a little over a year ago that has caused it to see a major surge in popularity. Bubble Witch Saga’s DAUs now top Zynga’s Farmville by 1.4 million — but that popularity hasn’t come without criticism.

Some players have noted Bubble Witch Saga seems very reminiscent of Puzzle Bobble and taken the company to task for that. Dale dismisses those comparisons, however.

“We are 100 percent using our own IP,” he says. “We’ve been taking the IP we like that has performed well [on the website] and launched that on Facebook.”

While the company is regularly looking for new ways to expand its reach, don’t expect it to broaden its focus to include resource management games like FarmVille. While they’ve been successful for other social gaming companies, King.com thinks they’re too difficult for lapsed players to return to. Instead, casual titles (like it focuses on) always leave a door open for players to walk away — and don’t penalize them for leaving.

“It’s a lot easier to reactivate in a causal game, whereas if you go to a resource management game after you haven’t played for a couple months, your castle has been destroyed,” says Dale.

See on www.gamasutra.com

Zynga takes the first step in promoting games published through its partner programs today by adding Row Sham Bow’s Woodland Heroes to the Facebook cross-promotion bar that appears above Zynga games.

Adding a game to the zBar, as Zynga called the tool, seems like a small thing compared to what Zynga wants to accomplish in publishing third party games on Zynga.com. Cross-promotion bars have been thoroughly explored by 6waves, Applifier and Tapjoy (which acquired AppStrip) on both social and mobile — and 6waves has a sizable head start on Facebook games publishing. But Zynga has two features that other cross-promotion networks lack: brand recognition and size (65 million daily active users and 292 million monthly active users on both social and mobile as of Q1 2012). Both of those are key factors driving interest from smaller developers in the Zynga publishing platform.

As detailed on Zynga’s blog today, publishing partner head Rob Dyer says that Zynga intends to drive traffic and test promotions during this early beta phase to see what impact it has on Zynga’s network as a whole — and what impact Zynga’s network will have on an individual game.

See on www.insidesocialgames.com

Social games companies – or, indeed, any Facebook application developer – using the social network’s Facebook Credits virtual currency have to give up 30% of revenues to Facebook. That’s a business model that works for games like FarmVille, but presents more problems for, say, selling music. However, it seems Facebook may be flexible going forward, as it tries to get different kinds of companies to use Facebook Credits. “We receive a fee of up to 30% when users make such purchases from our Platform developers using our Payments infrastructure. In the future, if we extend Payments outside of games, the percentage fee we receive from developers may vary,” explains a quietly-amended section of its S-1 IPO filing. How it might vary remains unexplained, but if the terms are good, we could see more bands starting to sell songs for Facebook Credits.
Source: TechCrunch – http://tinyurl.com/c89z67u

See on techcrunch.com

Good news: European companies are in second and third places in social gaming on Facebook. Bad news: Zynga is first.

Both Wooga, based in Berlin, and King.com, based in London, are now slugging it out for second and third places, according to AppData, a service that measures the popularity of mobile apps and developers.

Riccardo Zacconi, CEO of King.com, says that while Wooga had already pushed EA into second place, King has stolen a lead on them both this week in the measure of daily active users (DAU) playing social games on Facebook.

Nor is this a case of the newcomers on the block beating some old-timer that doesn’t get it. While EA may be traditionally associated with games consoles—a totally different kind of gaming that appeals to a completely different kind of player (young adult males rather than older adult females)—remember that it bought its way into social gaming with the purchase of the London-based Playfish for $400 million in 2009, and of PopCap Games, the maker of Bejeweled and Plants Vs. Zombies, of Seattle for $1.3 billion last summer.

But—and it is a very big but —before popping the champagne corks, let’s not get too self-congratulatory. Anyone remember War Admiral? Or perhaps more recently, Richard Thompson? No? War Admiral was runner-up to Seabiscuit in the 1938 “match race of the century” at the Pimlico Race Course in Baltimore, and Mr. Thompson was the unfortunate silver medal to Usain Bolt’s iconic 2008 Beijing 100-meter gold run. No one remembers runners up.

So while these two European companies slug it out for second place, the behemoth that is the U.S.-based, publicly quoted Zynga Inc. utterly dwarfs them. According to AppData, King.com has 10.26 million daily active users; Wooga 10.17 million DAUs; and EA 9.07 million DAUs. But Zynga (65.14 million DAUs) is twice as big as the next three games makers combined.

But hang on, says Mr. Zacconi, we are comparing apples and oranges. “If you look at the actual social games that Zynga has —not, for example, poker games—then its lead is cut.”

He is right, but that still leaves Zynga way out in front, and still bigger than the next three combined. Both Mr. Zacconi and Jens Begemann, CEO of Wooga, point to one reason for Zynga’s dominance. “Zynga was there when social gaming really started to take off and were able to get that essential first foot in the door,” said Mr. Begemann. “That early start has been the key for them.”

Neither CEO said passing Zynga was a target for them. “I am not focused on passing Zynga,” said Mr. Zacconi. “My target is to build a company that is leading in casual and social games, making sure that every game we launch is the best game we can have in it is genre, and focus on revenue and profits.”

But according to Nicholas Lovell, CEO of the acclaimed Gamesbrief, a respected newsletter that covers the games industry, to focus on who is winning on Facebook is to look in the wrong place. “The Facebook battle has been won by Zynga,” he said. “Mobile is the battleground of the future.”

“No one is saying, ‘Guys if we don’t have a Facebook strategy we are dead.’ They are saying ‘if we don’t have a mobile strategy we are dead.’”

But he is keen to stress he is not writing off Facebook and its 845 million users; simply that the world’s largest social network has matured and as such it will attract different, and perhaps less exciting, companies.

“It is not to say that Facebook is not a viable platform for making real revenues and profits. But it is that the race to build a must-have, 10-times return, gaming business on a new and exciting platform, well if you were writing the business plan for that game business, Facebook might not even appear in it.”

And for companies looking to build a long-term future, the Zynga model—get big, quick and then look to exit on the public markets—may be a game plan to emulate.

It is a strategy not lost on Mr. Zacconi. King.com has certainly made no secret of that an IPO is a consideration and while Mr. Zacconi is keen to stress that nothing has been decided, he has put in place the changes needed should he decide to go that way. By way of an aside, he did say that his preferred market was not in Europe—it’s NASDAQ.

None of the players in this battle are blind to the changes. Zynga acquired OMGPOP, makers of the viral (and mobile) game Draw Something; Wooga launched Diamond Dash last year for iOS last year, and King.com is to launch its first mobile game, Bubble Saga, next week, first on Amazon’s Kindle Fire tablet, and then on both iOS and Android two weeks later.

With the growth of mobile, and at the moment the lack of any clear champion, the gaming space has been thrown open once again. If European companies can repeat their belated success in social gaming in this new arena, then the race is on.

See on blogs.wsj.com

Spotify CEO Daniel Ek announced on Wednesday during an Ad Age Digital conference in New York City that it is partnering with companies such Coca-Cola and will build branded apps for them within the music platform. The music-streaming service held its own press event hours later to further discuss the partnership with Coca-Cola.

“We are taking the music agenda to the next level with Coca-Cola,” Ek told attendees. “This is a huge milestone for us. This will bring awareness to more people around the world about Spotify and enable them to share music with family and friends.”

Although some expected a Spotify iPad app launch at the press event, Ek said it wouldn’t debut today.

“It’s in the works,” Ek said. “Today’s focus is on our partnership with Coca-Cola.”

Coca-Cola will not only use Spotify as the key underlying technology to support its music strategy, it will integrate the service into its Facebook presence and Timeline. The team will also be dedicated global partners in 2013 for a new campaign to be unveiled later in the year.

Emmanuel Seuge, head of global sports and entertainment marketing at Coca-Cola, noted that the move is a strategic partnership more than an advertising deal.

“This is not an advertising deal and we don’t disclose the amount of investment anyway,” Seuge said. “This is more of a strategic partnership. Our logo is important, but we want to be a part of the conversation with music fans. We are going to push our content more than our logo.”

See on mashable.com

What is Songza?

Songza is a non-interactice music streaming (ie. internet radio) site that is seamlessly integrated with Facebook; but rather than some fancy computer algorithm determining song selection, they have actual music fans, writers, and musicians create and share playlists to fit specific moods or themes.

Artists who’ve created and posted Songza playlists have seen significant spikes in engagement on their Facebook pages– and since Songza can access the MediaNet catalog, CD Baby artists’ music can be added to the mix (if you’re opted into the “anything that pays” distribution level). Plus, they pay you through SoundExchange for plays. It’s all pretty simple.

You get to share something personal with fans right on Facebook, a playlist of your favorite music! (And they won’t mind if you slip one of your tracks into the mix). If they like the mix, they’ll comment, give their opinions, and share with friends.

Here are Songza’s recommend steps:

1. Think of a great playlist idea. It could be a playlist of your favorite songs, songs from artists you admire, songs from bands in your hometown, or great workout songs. Whatever. Just make it something you think your fans will enjoy.

2. Create the playlist on Songza. Go to http://songza.com/contribute and choose from a catalog of 15mm songs, including songs distributed through CD Baby. Feel free to include your own songs, if you want.

3. “Release” the playlist, grab the URL, and post it to your Facebook page with a very brief message.

Pretty simple. Try it out and let us know how it goes!

See on www.hypebot.com

Today Facebook co-opts the best thing about Myspace pages — rapid music discovery — by prominently adding a “Listen” button to musician Pages right next to the Like button. When clicked, the artist’s jams will start to play in your most frequently used Facebook music streaming app such as Spotify or MOG. If you haven’t authenticated any music apps, Facebook will prompt you to set up the one that’s most popular with your friends, or around the world.

Now with just a single click of an immediately visible button, visitors to Facebook Pages can sample an musician’s sound and decide if they want to “Like” them. The button will help artists get more people to fall in love with their recorded music, and while streaming royalties are small, it could get inspire people to buy high margin t-shirts and concert tickets.

The Listen button has just been rolled out to all musician Pages (try it here on Radiohead’s Page), but will only be available from the web for now. Hopefully a mobile version that fires up your native streaming apps is on the way. Down the line, Facebook could even add a similar “Watch” button to TV show and movie Pages that would launch Hulu or Netflix. While most engagement with Pages happens in the news feed, these buttons could make sure Page visits to media entities actually turn into media consumption.

Depending on what streaming service you use you’ll hear a slightly different playlist. Spotify plays through the five most popular songs of an artist in a row, whereas Rdio starts playing a mix of songs through an artist’s “radio station”. Other apps like Slacker, Earbits, and Deezer are all compatible. I think Spotify has the right idea playing the most popular tracks first, and other apps might do well to put an artist’s best foot forward as well.

Some developers might not be singing along with the latest feature, though. Musician profile apps like BandPage, ReverbNation, and FanRx have classically been the way you listen to music on a artist’s Facebook Page. But those apps are buried under one more click deep through app tiles located directly under the Listen button. In fact, BandPage’s app often labels itself “listen”. Facebook downplayed the threat when I asked, but if someone wants to hear a band right away, they’re likely to click the new Listen buttons and traffic to musician profile apps could suffer.

Overall, this is a smart build-out of Facebook’s music partnerships from f8, and the synchronous “Listen With” feature it added in January. This could make Facebook Pages your first stop when you want to check out a new band. It’s a great experience because now it doesn’t matter what app you or a band prefers. You just go to their Facebook Page, find the Listen button that’s in the same place every time, and crank it up.

Via techcrunch.com

We saw marked declines heading into Facebook’s official switch to Timeline. But it now looks like Timeline is eviscerating the Facebook artist app, or at best forcing it into some lowly plateau.
Here’s a look at artist app traffic for three of the largest DIY appmakers: BandPage (formerly Root Music), ReverbNation, and FanRx (formerly BandRx). The mandatory switch to Timeline, which disabled default landing pages on artist apps, happened March 30th.

Via digitalmusicnews.com