More Than Games, a Net to Snare Social NetworkersJanuary 15, 2008ADVERTISINGMore Than Games, a Net to Snare Social Networkers By BRAD STONEFRIENDSHIP means being able to sink each other’s battleships.That is the thinking of Mark Pincus, a well-known Silicon Valley entrepreneur who has built several Internet start-ups, including Support.com and the early social network Tribe.net. On Tuesday, Mr. Pincus is pulling the wraps off the Zynga Game Network, a company devoted to developing online games that work on the pages of popular sites like Facebook and MySpace.Zynga, which has 27 employees, has spent the last few months quietly reinventing card games like poker and blackjack and classic games like Risk, Boggle and Battleship. Users of social networks can add the games to their profile pages and play with their friends online.The games, particularly Zynga’s version of Texas hold ’em poker, have already amassed hundreds of thousands of regular users. The company and others like it share a belief that Internet ventures can be created on the backs of the rapidly growing social networks. Last year, these networks invited entrepreneurs to take advantage of their big crowds of users and to keep the revenue they generate from advertising. Whether this approach can generate big profits over the long term is not clear, but plenty of people are giving it a try. More than 7,000 applications have been introduced on Facebook since the company opened to outside programmers in May, and more than 80 percent of its users have added at least one application. Seasonedcompanies and small start-ups alike are rapidly developing add-ons for Facebook and other sites, including MySpace, which has promised to open its service to developers early this year.•Zynga is also tapping into the current enthusiasm for so-called casual games, which have a short learning curve and generally appeal to people who have never heard of games like Halo and spend limited amounts of time playing games.“People already love to play casual games,” said Fred Wilson, a partner at the venture capital firm Union Square Ventures, which led a $10 million round of financing in Zynga. “But when you take a casual game and stick it inside a social network, it becomes way more exciting. This is like pouring gasoline on fire.”Mr. Pincus is yet another seasoned entrepreneur who is putting great stock in Mark Zuckerberg, the 23-year-old founder of Facebook, and his conception of the “social graph.” The idea is that applications like games are even more appealing, andspread more quickly through networks, if friends, family and colleagues can share the experiences.“I’m not a game fanatic,” said Mr. Pincus, 41. “But I represent the market I want to go after. I generally don’t have time for games, but it could be a really nice way to connect, for example, with my niece.”The company is based in a former potato chip factory in the Potrero Hill neighborhood of San Francisco. Mr. Pincus — who founded Support.com, which went public in 2000 and is now called SupportSoft, and who sold some of Tribe.net’sassets to Cisco Systems last year — bought the building to house his new venture. He is also an early investor in Facebook. Other investors in Zynga include high-profile Silicon Valley figures like Peter Thiel, aFacebook investor and board member; Reid Hoffman, the founder of LinkedIn; and Robert W. Pittman, the former chief operating officer of America Online.None of Zynga’s games are particularly rare. For example, there are scores of versions of Texas hold ’em on the Internet, and when Zynga introduced its version inJuly there were already several others on Facebook. But the company develops its games with the interactive features of Facebook in mind. For example, users can invite their friends to play, or see who is already playing and join them in the middle of the game. Zynga has some aggressive plans to stitch together its various properties. Beginningthis week, when users join one of its games, they will have access to a universal lobby where they can chat and interact with other users who are playing other Zynga games on other social networks. The company hopes to one day solicit traditional advertisers, but for now it makes money by selling ads to the creators of other applications who want to pull in more users. Zynga charges an advertiser 50 cents every time one a Zynga player installs the advertiser’s application. It offers players incentives to do so; for example, blackjack players can get extra chips by clicking on a link. Mr. Pincus says that players click on 50,000 such links each day, although many leadto other Zynga games. He says the company is already breaking even and has not yet tapped its venture capital. •Zynga now has a dozen games and is rolling out four to eight new ones a month. All of them trail behind the popularity of Scrabulous, a Scrabble clone that is one of the most popular games on Facebook, with nearly half a million active users.But in at least one respect, Zynga does not want to copy Scrabulous. Last week, the Web site of Fortune magazine reported that the two brothers in India who created the game had received a legal notice from Hasbro, the toy company that owns the Scrabble brand. Hasbro did not return a request for comment, and Rajat Agarwalla,one of the brothers who created Scrabulous, said his lawyer had advised him not to comment on the matter.Mr. Pincus said he has been careful to avoid trademark problems. Zynga dubs its version of Risk “Attack,” and its version of Boggle is called “Scramble.” Mr. Pincus said the company would be interested in licensing game trademarks or working withtraditional game makers.Evan Wilson, a senior research analyst at Pacific Crest Securities, said the online game industry was rife with copycats, which does not generally pose a legal problem if the knockoffs have different names and altered mechanics. Mr. Wilson thinks that if companies like Zynga prove successful, game giants like Electronic Arts, which owns the digital license for Hasbro games, will move quickly to enter the arena. Mr. Pincus is counting on that. He believes his company’s valuable real estate, at thetop of the lists of “most popular applications” on sites like Facebook, could become an essential asset. Other game makers “will be faced with an opportunity to launch a game in the directory next to 1,300 other games and hope it gets found, or to
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