Casual gaming powerhouse Zyngahas boughtChallenge Games. Challenge is well-known for games offering strong “virtual goods” elements.
Zynga has built up its estimated $5 billion in worth and with 200 million users, largely on games like Farmville and Mafia Wars, popular on Facebook. But it has been going to town in an effort to extend its popular franchises. Challenge may provide it with a means of turbocharging its in-game economies.
Recently, Zynga has announced a “five year strategic relationship” with Yahoo, which seeds Zynga’s games throughout Yahoo properties. It has also announced that it will stay with Facebook, despite plenty of rancor with the social media site on which it thrived, but which also kept taking bites out of the company’s profits.
Virtual goods and virtual currency provide a major avenue for online gaming revenue. Challenge being folded into Zynga may help shore up that aspect of its business model. Staying on Facebook, Zynga must use that company’s “Facebook Credits.” Outside, there may be additional opportunities.
Backed by Sequoia Capital and Globespan, the Austin-based Challenge Games launched in 2007 to focus on immersive, virtual goods Web games. The company has already been renamed Zynga Austin. Challenge CEO and Co-Founder, Andrew Busey, has been named general manager and vice president of the Austin studio and Zynga said its 35 employees will be retained.
Zynga’s SEC filing indicates a “total offering amount” of $20,571,454.
