Author: Matthew Le Merle published in the Financial Times
By now every CEO has read about the 850m (and rising) active monthly users of Facebook and the attractiveness of other social networks including Google+, Twitter and LinkedIn. As much as 50 percent of Facebook’s revenue is driven by social games such as Cityville, Draw Something and Happy Aquarium (Facebook discloses that 12 per cent of its 2011 revenue came from Zynga alone).
These incredible revenue numbers are making social games companies extremely valuable. Last year’s IPO of five-year-old San Francisco-based Zynga left it with a market capitalisation of more than $7.5bn, and this year’s IPO of London-based competitor Zattikka demonstrates continued investor interest in this phenomenon. Every chief executive watching this meteoric rise wants to know how these social gaming leaders have created so much shareholder value so quickly and whether they can do the same by digitizing and socializing their own offerings.