Google Invests $200M in Farmville? Is Search Over?
Can pretend farming save Google?
According to ReadWriteWeb, Google has invested over $100 million and possibly as much as $200 million in Zynga, bringing the total investment in Zynga to somewhere around half a billion dollars. You might not know the name Zynga, but if you spend any time on Facebook, you have probably heard of some of the games they have created, such as Farmville and Mafia Wars. Believe it or not, according to TechCrunch, Zynga’s social games were worth $350 million in revenue in the first half of 2010, with half of that being operating profit.
What Does It Mean?
Those numbers are impressive, but mainly for what they signify. Some people might focus on the negatives for society that spending so much time harvesting virtual crops could indicate. The important thing to me is that many people find their games compelling and apparently Google thinks they are compelling enough to build their Google Games product around in the future. But why?
My thought is not that Zynga’s product is going to be so profitable or such a huge traffic draw for Google in the long run, but that this investment is a move to stay ahead of Facebook. By getting Farmville accessible through a Google login and taking away Farmville as a way of locking in Facebook users, Google is positioning itself for a stronger play as a social network. Google desperately needs that because they are afraid that search will eventually lose out to social networks and if that’s the case, Google needs a social network to monetize through advertising. Remember, Google is not a search engine. Google is an advertising network that happens to have the biggest search engine, as well as a phone operating system, business productivity apps and a couple social networks in Orkut and Google Buzz.
Now don’t get me wrong, Zynga is a good business that will make a lot of money. But the big story here is that Google is making a big play to undercut Facebook and shore up their own business, especially their social networks. That means that Google is more than a little concerned about the future of search as a way of serving their ads and growing revenue. Good thing Google has some spare cash to throw around to make multiple expensive plays like this in the hopes that something helps. Whether this one will pay off for anyone other than Zynga, only time will tell.
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You do have to wonder what else Google might be able to do through its search engine. And it seems that, for “average” (meaning non-tech savvy) web users, Facebook is becoming their default site of choice. This is an interesting way for Google to find a backdoor in to that user base. I don’t play Facebook games, but plenty of the people I’m connected with on Facebook do. I can definitely see why Google decided to make this move.