Google plans to build a Google Games section and has “secretly” invested $100 million to $200 million in FarmVille-maker Zynga, sources told Michael Arrington over the weekend.Today, we got on the phone with industry sources to ask them “why.”
Sources say it’s easy enough to figure why Google would want to build a Google Games section full of games by Zynga, Playdom and EA’s Playfish.
For one thing, Facebook will soon become the largest site in the world, and games have been a big part of that growth. Anything Google can do turbocharge its own growth is helpful.
Second, people suppose that Google is concerned Facebook could disintermediate algorithmic search with search results organised by your friends’ interests. Anything Google can do to gain some control over the social graph (knowing who your friends are) is helpful.
Google Games is also probably a move to prevent an increasingly dangerous rival, Facebook, from completely owning the lucrative social games market. Google doesn’t have to profit here to win. It just has to make Facebook profit less.
(Google does this all the time. It built a free Mobile OS which is cutting into Apple, the free Chrome OS which should chip awat at Windows, and Google Docs which is disrupting Microsoft Office. These moves all boost Google’s primary revenue stream by locking in users, but they also weaken the competition.)
Some of our sources’ other perfectly reasonable explanations for Google’s interest in games include:
- Google Games will funnel more credit card numbers into Google Checkout.
- There’s big money in games. Facebook’s first president, Sean Parker, says virtual goods will make up a third of Facebook’s ~$2 billion revenues in 2010.
- Games gives Google users a reason to tell Google who their friends are. Google is supposedly going to try to build a social network called “Google Me.” This could help seed that.
- It’s not very expensivefor Google to build Google Games section. Why not try it?
It’s harder to figure out why Google needed to invest in Zynga to build Google Games. Some ideas we heard:
- Maybe Zynga would not have agreed to develop any games for Google Games without a financial investment.
- Other than Facebook, no one knows as much about how people actually use Facebook than Zynga. Maybe Google wanted a peek at that data and Zynga’s price was an investment.
- $100 million and even $200 million is chicken feed to Google.