Valuing Mafia Wars, Farmville – Zynga Worth $5 Billion?!

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Zynga is the leading maker of social media games like Farmville and Mafia Wars.  You know, the games you love to hate on Facebook and Myspace.  The equity analysts at SecondShares have put a dollar figure on the value of Zynga if it were publicly traded (it’s a privately-held company).  That value is $5 billion.

Yes, Billion with a B.

They also think that by 2015, the value could double to $10B.

Suddenly, robbing banks and attacking your rivals with a shotgun and two Colt .45s doesn’t seem quite as lame anymore.  Maybe these addictive games are really worth something.

SecondShares based their valuation on a lot of things, including outstanding shares (venture mostly), growth rate, and so forth.  The largest amount of value, however, comes from Zynga’s user base.  It’s sheer size, length of captivity within each game (most spend at least 20 minutes a day), and the current revenues per user (from buying game items to clicking on ads).

This user metric is astoundingly profitable and beats most Web-based user-retention schemes by a long shot.  Few Internet properties can boast the kind of user numbers and time spent engaged that Zynga can.

The authors of the report were Lou Kerner (formerly Merrill Lynch and Goldman Sachs), Eli Halliwell (Sanford Bernstein), and Jay Gould (Gamers Media CEO).  They measure Zynga as the number one gaming platform online in social media with an estimated 237 million monthly active users and 6 of the top 7 social games right now.  That puts them leagues ahead of the next-largest competitor, Electronic Arts (who owns Playfish) and CrowdStar.

Wow.  Who knew that time wasters like Farmville were actually worth money?


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