Don't Look Now, But There's A Massive Roll-up Going On In Social Gaming

Playdom CEO John Pleasants

Social games company Playdom announced the acquisition of Buenos Aires-based developer Three Melons today.

This is the latest in a series of acquisitions in social gaming over the past few months.

With industry leader Zynga raising $180 million in December, and gaming giant Electronic Arts making a huge play in social games by acquiring Playfish, there is a lot of cash lying around and plenty of pressure to scale up to stay competitive.

Some of the deals that have been announced thus far:

  • Zynga acquired Serious Business in early February.
  • Playdom acquired Offbeat Creations in early March.
  • Ex-MySpace boss Chris DeWolfe raised over $20 million, acquired MindJolt, and made clear his intentions to keep on buying up game developers.
  • Several weeks ago, Playdom acquired Metro Games, another Argentine company.

Why the big roll-up? The answer is simple: People are making lots of money getting Facebook users addicted to simple games and then selling these users “virtual goods” that make the games slightly easier to play.

In March, Citi analyst Mark Mahaney reported that that PayPal, which processes 50% of all virtual goods payments on Facebook, had $500 million in virtual goods revenues in 2009 — up 200% from 2008.

Nobody’s capitilized on this trend better than Mark Pincus’s Zynga. Mark Maheny says Zynga was PayPal’s the second largest merchant, following only eBay.

Never heard of Zynga? Confused how anybody could make so much money off something so lame sounding as “virtual goods?” Catch-up fast: How A Stupid Facebook Game Makes Zynga Millions

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.