Zynga, the 2007 start-up company that makes and operates casual games on Facebook, Myspace and Tagged made so much money last year. I never really thought that silly Flash-based games and PHP/MySQL text-based games could be so profitable. Zynga’s total revenues are even more than Blizzard’s World of Warcraft estimated annual membership fees of $240M! And to think that Zynga is spending so much less money on game development and server maintenance! Industry watchers are very impressed with the current shift of gamers to browser-based social gaming
The biggest social games operator, Zynga, refuses to say how much is its profits from $250million of revenue but estimates range from $80-150 million. If you take Wall Street’s market value average valuation multiplier of 15x, Zynga is now worth $1.2 billion on paper. The lucky investors of Zynga will reap so much money once cash-rich Microsoft or Google decides to buys it. Zynga makes more profits than money-losing Youtube (you may read our latest news about Youtube Videos and Movies – Youtube’s new business venture as of late).
Zynga’s mind-boggling success can be attributed to people around the world who are madly in love with Zynga’s free games like FarmVille, FishVille, Cafe World, Mafia Wars and Zynga Poker. There are more than 60 million daily active players of Zynga’s simple but addictive social games. I am one of their clients. I play Mafia Wars and Cafe World at Facebook on a daily basis. I have spent real dollars to buy virtual goods from Zynga. I only spent less than $100 since October 2009 but friends of mine at Facebook have individually spent as much as $2000 on Zynga’s games. This is one way that Zynga makes money from its players. Get them addicted enough to spend cash on their beloved games.
Andrew Trader, co-founder of Zynga, admits it made more than $80 million dollars from sale of virtual goods last year. The rest of what they earned came from third-party tie-ups like with it does with Netflix, Blockbuster and Offerpal. Zynga monetizes its gargantuan player population via advertising and discount-deal trading. For example, if you buy $300 dollars worth of Netflix movies and tv shows, Zynga will award you 1000 Godfather points which you can use on Mafia Wars to make your imaginary Mafioso stronger. Netflix pays a commission to Zynga but Andrew Trader declined to offer specific details.
I bet that Zynga is making more profits than Facebook itself or Myspace. The company was smart enough to ride on the viral success of social networking. Let’s try to play more Zynga games and make Zynga really bigger than World of Warcraft. If you can buy stocks, do so now. Last December 2009, Digital Sky Technologies, a Russian venture company, bought $180 million worth of shares at Zynga. Stock speculators are already betting huge on the future of Zynga. As I have mentioned earlier, Zynga is gonna be worth billions of dollars if and when somebody takes over it or they make a public offering.