Don’t thing social gaming is a big business? Think again. Zynga, one of the leading social gaming platforms on Facebook and MySpace announced at the end of the year that they were cash flow positive. Today PaidContent quotes Tim Chang of Northwest Venture Partners who says, “they’re making something like $30 million to $40 million per year mostly from people buying Texas Hold ‘Em chips on Facebook.”
Remember that million dollar application I wrote about previously? It looks like Zynga has at least one if not more than one “million dollar application”, possibly even reaching multi-millions. Also extremely popular for the company is YoVille, a large virtual world with over 3 million monthly active users.
It’s clear that social games have experienced a surge in popularity and some companies like Zynga have already figured out a way to monetize that traffic effectively. While it’s challenging to remain one of the top social gaming companies, some games have a high “stickiness factor” such as Texas Hold’em which has been extremely popular since soon after the launch of the Facebook platform.
Sticky games on social networks are a pretty solid investment as they tend to pay out for a long period of time. Mob wars on Facebook is one example of a game that continues to attract users. There are many other social gaming companies that have experience wide spread success. Playfish for example, is the 4th most popular company on Facebook in terms of monthly active users, following right behind Zynga.
Playfish has also been monetizing their games although we don’t have exact figures on how much revenue they are generating. It’s clear that social gaming is here to stay and may continue to be one of the most profitable if not the most profitable segment of social applications.