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MySpace wants to be “a gaming platform” – who are the top acquisition targets?

By on July 27, 2009
MySpace screenshot

Jonathan Miller, head of digital activities at NewsCorp, has said that “MySpace is and will be more in the future a gaming platform, a space for people to meet and play games” (Thanks to GI.biz for quoting the Fortune Brainstorm: Tech conference in Pasadena, California).

He added: “If you look at the big activities online, games right now is number three: Communications, search, games. So it’s clearly going to be a major focus.”

The company has not ruled out acquisitions, so who is he going to buy?

Let’s start by what MySpace is about: a place for people to meet, hang out, and demonstrate what kind of person they are. It’s also a young place with a demographic much more teenage than Facebook (although older than Bebo). So Miller will be looking will be looking for web-friendly properties that increase traffic, stickiness and, above all, monetisation for MySpace.

Highest probability acquisitions for MySpace

  • Zynga (US-based, rumoured to be generating $100 m in revenue)
  • Playfish (British, profitable, raised $21 million in VC)
  • Playdom (largest developer on MySpace, recently appointed ex-EA COO John Pleasants as CEO)

All of these are venture-backed, fast growing business making meaningful money from social networks. Rumours suggest that Zynga and Playfish together will make 1/3 as much revenue as Facebook this year, which is impressive for businesses that are two years old. In fact, it’s better than Facebook’s own monetisation. However, Playfish isn’t currently active on MySpace, which must make it a lower likelihood target. Zynga is my overall top tip.

Medium probability

All of these sites are big and growing. However they are not primarily focused on social networks: they all use their own domains to offer games, which means that the overlap with MySpace is not immediately apparent. They would be a sensible addition to News Corp’s digital stable, but would take longer to make a difference (by increasing users, stickiness or revenues) to MySpace.

Low probability

  • Activision
  • Electronic Arts
  • Take Two
  • etc

I struggle to see any rationale why MySpace would want to saddle itself with businesses that have huge legacy distribution businesses (i.e. a physical publishing arm), a hit-driven portfolio and valuations that suggest that investors still think that these businesses have inherent growth. One day, a movie studio might decide to pony up, but it doesn’t make sense for an online business like MySpace.

Wild card

OK, go on, flame me. Gaikai is Dave Perry’s streaming technology that may well be vapourware. However, unlike OnLive, it doesn’t require a complete change in consumer mentality to work: at his recent Develop Conference keynote, Perry made it clear that he sees it initially as a marketing tool for publishers. A player can play a full version of a mainstream game, like Call of Duty or Mario Kart, in a browser, almost instantly. There will be issues (for example, some games won’t be able to run full screen), but it is a powerful way to put game play into the hands of players, who can then decide if they want to buy it.

Since MySpace makes most of its money from advertising, this could be a sensible and (if done soon) relatively cheap investment.

If Murdoch comes knocking, Dave, I’d take the money.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • http://en-gb.facebook.com/people/Tadhg-Kelly/733241426 Tadhg Kelly

    Why not buy Hi5?

    Hi5 has been actively building itself as a games-oriented social network this year, has developed a series of technologies like virtual goods integration, has a userbase that could probably help boost Myspace's numbers by 40-60 million, etc.

    Simply buying one of the successful developers won't be enough for Myspace. The issues are many, but chief among them is that most of the companies you've listed don't have a full package approach. They all rely on a myriad of billing providers. For Myspace to buy into the space they would need an acquisition target that not only has some games, but also has the infrastructure. I don't think any of the social game developers really have that in play yet as they are all so young.

  • http://en-gb.facebook.com/people/Nicholas-Lovell/739651170 Nicholas Lovell

    That's a really good point, Tadhg. I think the key question is whether MySpace feels that it needs content (in which case, buying someone with lots of traffic to MySpace games like Playdom makes most sense) or if they want tools to monetise content (in which case billing providers or microtransaction companies might be most interesting).

    Hi 5 definitely looks like a good bet.

  • http://en-gb.facebook.com/people/Nicholas-Lovell/739651170 Nicholas Lovell

    That's a really good point, Tadhg. I think the key question is whether MySpace feels that it needs content (in which case, buying someone with lots of traffic to MySpace games like Playdom makes most sense) or if they want tools to monetise content (in which case billing providers or microtransaction companies might be most interesting).

    Hi 5 definitely looks like a good bet.