Inside Social Games

Boku has emerged as one of the main mobile payment service providers for social games in the last year, and today it is capitalizing on its growth, announcing a third round of $25 million. DAG Ventures led the funding, previous investors Benchmark Capital, Index Ventures and Khosla Ventures participated.

The company is also rebranding itself to consumers as Paymo, the name of one of the mobile payment companies that had been rolled up to create Boku earlier this year.

The service is live in nearly 60 countries and on 190 carriers today, marketing head Ron Hirson tells us, and the company is seeing new revenue coming in from South America, Asia and other parts of the world. Clients now include large social game developers like Playdom (screenshot from its game, Sorority Life, below), Playfish and Hong Kong-based 6 Waves, along with long-time ones like Zynga.

Boku’s service lets you bill your mobile phone for online payments. You enter your number and the amount of points you want to buy, then Boku sends a text message to your phone confirming the bill. Once you confirm, the company charges your phone and you’ll see the charge on your monthly bill. Although it can be used in a variety of purchasing contexts, this method of payment has proven most popular with users looking to buy small amounts of virtual currency so they can buy goods in a game. Typically, 10% to 15% of in-game payments go through mobile services like this. Boku’s rivals, in one form or another, include Zong, Surfpin and Obopay.

The main rival, Zong, is also live with many of the same game developers, meaning that game companies are trying to offer payment options through whichever mobile payment service users happen to prefer.

The new money will go towards more global expansion, Hirson says, with the company continuing to build out its technology, business relationships and customer support. He notes that as the company has expanded, it has also done well against local mobile payments competitors, especially in Asia. Boku could see especially significant revenue growth in the region, given the popularity of social games across much of Asia, as well as the established popularity of virtual good in some Asian countries.