Social gaming sector braces for deal wave

Sun Oct 10, 2010 12:57pm EDT
 
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By Alex Dobuzinskis

LOS ANGELES (Reuters) - Gentlemen, start your engines: the fledgling social gaming industry is revving up for a new wave of acquisitions and consolidation this coming year.

Among those eyeing the likes of Zynga or Crowdstar are Web powerhouses seeking to shore up their social networking credentials such as Google Inc and media giants such as News Corp or Viacom Inc seeking new marketing avenues, industry executives and analysts say.

As online gaming continues to grow at double-digits -- it became the No. 2 online activity in June -- a growing number of corporations hoping to boost their Web presence have begun to take a serious look at the biggest players in social gaming, including oft-cited targets such as Crowdstar and Kabam.

"The truth is everybody is talking to everybody, every potential buyer is probably talking to just about every social game company out there," said Tim Chang, principal with Norwest Venture Partners, whose firm invested in Playdom.

Microsoft Corp could buy a social gaming company to enhance its Web-connected Xbox console platform and an Asian company such as Tencent Holdings Ltd could see a chance to gain U.S. market share, industry executives say.

And gaming executives may want to reduce their reliance on a single platform -- especially since Facebook tightened privacy constraints this year that make it difficult for users to publicize their in-game exploits.

That may have made companies such as Playdom, sold to Walt Disney Co for over $563 million, more approachable.

BEACHED WHALE   Continued...

 
<p>Visitors play at an exhibition stand at the Games Convention Online 2009 fair in the eastern German city of Leipzig July 31, 2009. REUTERS/Fabrizio Bensch</p>