Inside Social Games

E-commerce service provider Live Gamer is announcing the acquisition of Twofish, a Palo Alto-based provider of post-purchase virtual economy analytics services to social application and casual game developers, this morning. Combined with Live Gamer’s recent purchase of Korea’s N-Cash, the companies say the acquisition is designed to create “the first end-to-end solution for the micro-transaction industry.”

Terms of the deal were not disclosed. Twofish had raised $4.5 million from Triplepoint Capital, Rustic Canyon Ventures, and Venrock in a round late last year.

“This deal gives us a full commerce solution for publishers,” Mitch Davis, Live Gamer’s CEO, told us. “With N-Cash, we added the international payment platform. With Twofish, we complete the technology solution.”

Historically, Live Gamer has been focused on large scale MMO’s. But with the Twofish acquisition, the company is signaling that it’s betting on the future of social and casual games as well.

“Social game developers are a major customer category for us, because we’re seeing an explosion in the number of game developers and games in the market,” Davis says. “The number of indie games over the next few years will be huge, largely because of the distribution capabilities of social games. It’s the style of game play that’s growing for people who don’t have the time to play hard core MMOG’s. They want to pick up their iPhone or Facebook and play for five minutes.”

Twofish’s Lisa Rutherford says that although the company has seen “explosive growth” for the last six months, “small players [like Twofish] can’t keep it up if they just stick to social.”

“Virtual goods and currencies are old hat for us. We’re all focused on what’s next – true integration into game play. You have to be thinking about cross platform experiences across online, social platform, and console games. We’re so excited about pushing that envelope,” Rutherford tells us.

To date, Twofish has priced its services in different ways for different customers – either a licensing agreement or on a per transaction basis. No word yet on if or how those pricing plans will change now that the company is part of Live Gamer.

Live Gamer has raised a total of $24 million in venture funding from Charles River Ventures, Kodiak Venture Partners, and FirstMark Capital.