Former MySpace CEO Looking at Social Gaming Roll-up
Former MySpace chief executive Chris DeWolfe has been looking at raising a large round of funding, and buying or otherwise merging smaller social gaming developers into a cohesive unit that can challenge Zynga and other market leaders. CNET published this story before we had a chance to, but we can confirm we have heard the same from multiple sources. We emailed DeWolfe early last week and we’ve heard nothing back.
Why would DeWolfe be looking at social gaming? Well, as he was MySpace’s CEO until last spring, he had the chance to watch Playdom, Zynga and a range of other developers grow big on MySpace’s developer platform. Certainly, he has seen many social gaming companies grow even bigger on Facebook.
And, why DeWolfe? His parting with MySpace owner News Corp. did not appear to be pleasant. But, 1) he made a lot of money for a lot of people when MySpace sold for $580 million to the media conglomerate in 2005, 2) he made money for News Corp. while running MySpace over the last four years, and 3) as a MySpace cofounder, he knows the social technology business better than most; the CNET report mentions that he may be working with recently-departed MySpace CTO Aber Whitcomb on the fund.
In other words, potential investors will listen to him, and developers might be convinced to join forces with him. How much money? $100 million, according to a report from this summer by TechCrunch, although at the time the focus of the fund was not named.
Meanwhile, the competition is getting more intense in social gaming. Big, traditional gaming companies like EA are looking at either buying companies (possibly Playfish, we first heard some weeks ago) and are meanwhile building their own social games. Leaders, like Zynga, are growing in part through buying millions of dollars in advertising on social networks. All big social game developers are also growing through cross-promoting new applications in toolbars within their more established ones.
In fact, back in early October, before we heard the DeWolfe rumors, we were speculating who could challenge the current markets leaders. “Perhaps a group of VCs or a private equity firm will step in with $100 million, roll up some of the smaller yet successful developer shops, and go to war?” DeWolfe is not the only person we have heard might be going for this approach.
The platform is in flux, as new changes — like the new homepage last week, or the notifications switch coming soon — hit all developers. Perhaps the time is right for a roll-up?