Yesterday it was announced that Zynga game network had raised a massive $29 million round of funding led by Kleiner Perkins. This follows a $15 million round raised by Zynga’s competitor Social Gaming Network and further emphasizes investor confidence in the future of social gaming. Earlier this year I spoke with Mark Pincus about the future of Zynga networks and social gaming in general.
The timing couldn’t have been better as rumors had been spreading around that Zynga was having trouble getting their new round of funding among economic turmoil. With the news of funding, the company also announced the acquisition of YoVille, one of the largest virtual worlds currently on Facebook with over 150,000 active daily users. The acquisition of YoVille also positions Zynga ahead of Social Gaming Network as the largest social gaming company on Facebook based on the total number of installs.
Measuring the top gaming companies based on the number of total installs doesn’t paint a totally accurate picture though. Social Gaming Network for instance, appears to be dwindling. Their active daily users have dropped and according to a number of sources, the company is now having serious problems with developer turnover. I will be interviewing Shervin Pishevar, CEO of SGN, later today to find out more about challenges facing the company.
According to Techcrunch, things appear to be booming at Zynga, “The company raised $10 million just last January, and Pincus claims he still has all of that money in the bank and is cash-flow positive with 80 employees.” While there appear to be new competitors popping up on a regular basis now, Zynga has established itself as the leader with the third most active game on Facebook (Texas Hold’em Poker), a dominant position on Facebook and now probably the largest war chest of any company in the space.
With funding galore for social gaming companies, there is no doubt that this space will be heating up over the coming months. In my opinion, the real test will be how the social gaming companies adapt with increasing competition from other platforms, especially the iPhone. Will we begin seeing more graphic intensive games? Will we see the launch of games on other platforms? For now we will have to wait and see.