Zynga’s Social Gaming War With EA

It’s the battle of the giants – or, in the minds of the hardcore gaming community, the battle of the ‘evil’ game developers. Giant gaming corporations Zynga and EA have been in an all-out war over the rights to some of the hottest social games of today, bidding multi-billion dollar sums for new mobile games to add to their inventory.

EA recently acquired Plants vs. Zombies, a social game that’s been immensely popular amongst the casual gaming crowd, for as much as $1.3 billion. Zynga recently bid as much as $2 billion in order to win the rights to Angry Birds, and failed in the process. It’s a big money game – one in which the multi-billion dollar sums of last decade’s tech industry seem to be returning to the mainstream.

But with the return of these massive acquisitions and huge price points, it there a return to the old-school bubble of the last technology boom? Most of the games being acquired by these developers have little or no real revenue coming in from them. The few that are making substantial amounts of money really aren’t making enough to warrant a multi-billion dollar price tag, are they?

Consider that YouTube, one of the world’s biggest websites with a massive inventory of display ads available to clients, sold for just over $1.6 billion. Consider that other social network services have been acquired for just a fraction of the rates being thrown around for these games. Is the new bubble in social gaming, or are these incredible valuations for free games really justified?

Zynga claims that its money is being spent on acquiring new property – grabbing up games that are going to become the next Farmville or Cityville. It’s an understandable strategy when you consider that Zynga’s strength has never been developing new games. But are these games really worth the huge price tags that large companies are willing to pay, or are they buying expensive duds?

Only time will tell. While we’ve seen game franchises last for decades – Mario, Zelda, and others like Pokemon the classic examples – we’ve seen many more fade as quickly as they appeared. It’s worth considering that the great game franchises of today were never built on a subscription type of model, or a free-to-play model, in which players have to continually pay to keep playing.

That type of payment model hasn’t exactly been popular amongst the gaming community, and it has the potential to kill off otherwise great franchises through customer dissatisfaction long before they become played out or overexposed. We’ll be keeping an eye on these current ‘hit’ franchises and on their long-term appeal. Will they grow into true hits, or will they fade as quickly as they arrived?

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