socially acceptable?
Social networking gaming giant Zynga is reckoned to be worth more than Electronics Art's stock market value.
Zynga, the company that gave us FarmVille and Mafia Wars has been valued at a staggering $5.51bn according to SharesPost which is an exchange for shares of privately held companies, Bloomberg reported.
The firm is believed to base its valuations on data from trades of private shares, venture-financing valuations and research estimates among other figures.
The sky-high valuation compares with EA's value of $5.16bn, listed on the Nasdaq stock exchange and could hint at social networking gaming companies being taken as seriously as traditional video game firms, or proof of the social networking/mobile bubble.
Zynga was reportedly started by Mark Pincus just 4 years ago and has become one of the fast growing tech firms, with growth driven by using Facebook to distribute its relatively primitive but addictive social games. It makes its real money by selling virtual goods like animals and vehicles to give players an advantage over their tighter peers. Zynga reportedly controls a third of the social gaming market, worth in the region of $1.6bn according to Inside Network.
Atul Bagga, an analyst at ThinkEquity which estimated the virtual good market could reach $3.6bn in only 3 years time, told the news service: "The valuation is not that crazy, given what's going on in the market. It's not that terribly expensive seeing the growth prospects."
While Zynga soars in popularity and wealth, EA has suffered falling retail sales of both gaming hardware and software as consumers shun hard copies of games and hanker after a social element, usually found online.
According to Bloomberg, EA's shares have plunged 7.4 percent since 1 March (in the same timeframe as Zynga's value doubled,) and EA has been forced to make some 2,500 of its employees redundant and go shopping for acquisitions. Neither Zynga nor EA commented on their respective valuations.
EA is reportedly second in size to only Activision Blizzard that has a market value of $13.9bn, while Zynga dominates gaming on Facebook with over 210 monthly active users, according to Inside Data. Zynga's growth is thought to have been boosted by raising $250m in private capital, snapping up 6 companies since May and increasing its workforce by a third to around 1,200 workers.
To diversify from its Facebook fan base, Zynga has made its own websites for its games (where it will get a bigger cut of the sales of virtual goods) and also put games on Microsoft's and Yahoo's websites. EA has reportedly been trying to diversify too and jump on the social gaming bandwagon with the acquisition of Playfish and only last week, the UK publisher of Angry Birds, Chillingo for a rumoured $20m.
