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.”
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Over the past few years there has been a tremendous shift toward open platforms and now there are limitless tools to connect with your friends, increase your productivity, and waste your time. Facebook was a tremendous catalyst for this but now there are millions of applications on the web, some useful, some not, most of which now provide developer APIs. For those of you not aware of what APIs are, they enable developers to quickly integrate their own features directly into another service or build upon existing application functionality.
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This morning Zynga, the leading social gaming company, announced this morning that they have launched their “Live Poker” iPhone application. The company claims that this is the first “live game” on the iPhone, meaning that it’s the first to interact with other players in real-time. I’ve actually played a version of the classic game Connect Four in real-time but perhaps this is the first high-end live game. I’m guessing that they mean this is the first live poker game on the iPhone.

The application lets you play with other players that are actively playing the company’s popular Texas Hold ‘Em game across other social networks including Facebook and MySpace. Also of interest is that this is the first iPhone application to leverage Facebook Connect. The free version of the application, which you can access here, provides you with 1,000 free chips a day.

If you wish to upgrade you can purchase the $10 version of their application and you’ll have 40,000 chips daily. As Erick Schonfeld points out, trying to get any more chips on a daily basis will be challenging since the iPhone platform doesn’t allow for micro-transactions yet. Zynga is the first social gaming company which continues to grow on other platforms while extending on to the iPhone platform.

Social Gaming Network (SGN) has experienced massive success on the iPhone platform but it has appeared to sacrifice their social platform games at the expense of their mobile games. Playfish, the current leader on Facebook (according to Adonomics and Developer Analytics) has yet to expand into the mobile space. When I interviewed Sebastien de Halleux back in August, I asked him about whether or not they planned on expanding on the iPhone.

He said that they were looking into it but didn’t provide anymore details. It’s clear that the social gaming space continues to heat up and Zynga continues to be one of the leading competitors in social gaming.

The markets in Japan may be getting crushed right now, but one lucky developer will be celebrating with a $30,000 cash prize at the Tokyo Game Show. The application, which was ironically developed by a company called “Contests2Win.com”, is called youCharades and “is a Video Talent Platform where users can guess various titles acted out by their friends and fellow users.” Contests2Win.com appears to be a fairly large organization rather than a small developer.

Other finalists include Crazy Life, The Ninja Webcam Game, and SmartBaby!. According to the release, MySpace will translate the application into Korean, Japanese, and Chinese and promote it as a “Featured Application” for free, meaning they won’t have to pay $75,000 for one week of promotion.

For those of you looking to participate in the MySpace gaming competition domestically, tough luck! The company has yet to announce any plans to launch a similar competition here in the United States. The next interesting test for these applications will be user adoption. So far, SmartBaby! has attracted almost 17,000 active users, whereas the other applications have all attracted less than 1400.

Interestingly shoved into this press release was a quote from Mitch Liu, the co-founder and VP of Product at Offerpal Media (who is also a sponsor of this blog). Offerpal and other competing lead-generation ad networks have been highly successful with social games. It will be interesting to see if that trend continues.

Last night Google announced that they had launched Google AdSense for games. One of the largest gaming companies benefiting from the new advertising platform is Playfish. Google actually included a demo of AdSense for Games directly integrated into Playfish’s Word Challenge game. This is a big step for Google and one that competing advertisers should pay close attention to.

Why? According to sources within Google, games are not the only applications that Google is advertising on within social networks. Google is testing out their AdSense platform for other social applications. Take a look at some of the most popular applications on Facebook and you’ll quickly realize that Google is testing banner advertising on some of the largest applications.

This could mean trouble for some of the existing advertising networks on Facebook that focus primarily on banner advertising. Currently eligible partners “must have a minimum of 500,000 game plays and have 80% of their traffic from the U.S. or the U.K.” Google is currently filling advertising inventory for Zynga, Playfish, Armor Games, Konami, and a number of other large gaming networks.

Currently Sprint, Sony Pictures, and esurance are the primary advertisers testing out the Google AdSense for games platform but we know of other advertisers, including the Travel Channel, who are testing out other forms of advertising on the social platforms. Look for Google to continue to expand their presence on social platforms over the coming months.

>Are you into developing the next wave of social gaming applications? Want to attend the 2008 Tokyo game show? Well if you are a developer of games and live in China, Japan, Korea, or India (e.g. not a reader of this blog), you can have the chance to win a trip! The significant part of this announcement is how heavily MySpace is promoting their platform as a place for games.

Social gaming has emerged as a highly competitive and rapidly growing space. Just this week the Social Gaming Network announced a round of funding from Jeff Bezos’ personal venture capital company. Zynga, a competitor to SGN, also announced today the hiring of two new executives as the company continues to expand.

This is definitely shaping up to be a fast growing segment on social platforms and possibly the largest segment next to applications which simply extend existing platform functionality. I’m not sure about other user habits of social games but I tend to pick one game and stick to it. Currently my game of choice? Mouse Hunt on Facebook.

As the platforms continue to mature, I have a feeling that we will see larger players enter the social gaming space. Another area of growth? The iPhone. With the launch of applications, more people are turning to their mobile devices for simple games and thanks to location aware systems on the iPhone it is now possible to build in social functionality to these games.

Social gaming is clearly at an early stage but MySpace’s announcement today makes it clear that social gaming will continue to be one of the most significant segments on social platforms. What’s your favorite “social game” to play?

This morning, the Social Gaming Network is announcing that they have accepted an investment by Bezos Expeditions, the fund which manages Jeff Bezos’ personal venture capital investments. The most recent investment we covered by Bezos Expeditions was Animoto’s round.

As usual we don’t know how much money has been invested but given that Bezos Expeditions has invested over $70 million in tech startups, my guess it is in the millions. Back in May SGN announced a $15 million Series A round lead by Greylock Partners and Founders Fund. These investments make it clear that many large players in Silicon Valley foresee a great future ahead for social gaming.

The real challenge ahead for many of the social gaming companies will be competition from traditional competitors such as SEGA or Electronic Arts. EA has already launched applications on Facebook and SEGA has started focusing on the iPhone where a new wave of social games will begin to pop-up. While we are still at the early stage of social gaming, I believe there is a broader shift toward more engaging games and a heavier feature set.

This is great news for the Social Gaming Network though and it will be interesting to see how this space continues to grow over the next 6 to 12 months.

Last week I interviewed Mark Pincus of Zynga gaming network. At the time, Zynga was the largest gaming network on the social networks. This week the tides have turned with Social Gaming Network’s acquisition of Free Gifts, Nicknames, Oregon Trail and Friend Block. While these aren’t necessarily games they are some of the most active applications on Facebook.

Just like Zynga, Social Gaming Network has built their own toolbar which sits at the top of their games and helps distribute users across their network. The platform enables any developer to become part of their network and benefit from some of the traffic being generated by the network as a whole. Currently Zynga and Social Gaming network sit at the top of the food chain but there are a number of other competitors that are joining the race.

While it will be extremely challenging for new entrants to compete thanks to the decrease in application virality, an evolution of gaming technologies could easily bring about new competitors. Social Gaming network is also rumored to be raising another round of funding. It will be interesting to see how this space pans out.

Earlier this week I had the opportunity to interview Mark Pincus of Zynga gaming network. Zynga is currently one of the most dominant social gaming companies on the web. Social gaming in general is a nascent industry but is gaining a lot of momentum and a lot of attention as participants are attracting millions of users to simple applications. You may have experience playing games such as Scrabulous on Facebook. That’s only one social game (not produced by Zynga).

Zynga now has the largest Texas Hold’em poker game on the web with a presence across a number of social networks including Mysapce and Facebook. Back in February we covered the launch of the Zynga gaming platform which enabled developers to leverage some of the traffic being generated by Zynga’s overall network. At the time, Social Gaming Network (a Zynga competitor), also launched their own network. Both systems ultimately provide the same thing but currently Zynga appears to have significantly more traffic.

In the podcast Mark brings up some of the statistics being generated by their network which are substantial. We also had a chance to discuss Mark’s thoughts on the future of social gaming and where this space is headed overall. There were a few points during the interview when my Skype had some hiccups but through context you can figure out what Mark was saying since it is no more then quarter-of-a-second interruptions. Hope you enjoy!

Yesterday evening Kristen Nicole published details about a new social gaming feed that SGN, the social gaming network, plans on launching in the coming days. The new feature enables users to display all of the gaming activities that they are active in on the social web.

While I think this could be an extremely useful tool I am also rapidly realizing how the newsfeed is becoming just as ubiquitous as a user login. If this does indeed take place (which I would predict it does), we are going to witness an extension of what already has been created in “Web 2.0″: the duplication of feature sets across every product offering.

How many feeds can we possibly create? Don’t get me wrong. Creating unique feeds for each type of activity makes a lot of sense. Then again, should users be the ones that are able to do this? Seriously there should be one feed tool that enables us to customize all of the news that we would like to have displayed. I don’t want to be too cynical but we are seeing the creation of a type of redundancy that is unnecessary.

I don’t need a bazillion feeds, I don’t need thirty sites to log into and I definitely don’t need multiple identities. So how do we get to one? It’s such a simple number but such a challenging target. Am I overly cynical (if I am it’s because it is so late at night )?