The9 Invests in US Social Game Operator with Intel and Time Warner

25 May 2011 18 h 28 min 8 comments

The9 (Nasdaq:NCTY) joined Intel Capital, Time Warner (NYSE:TWX) and media mogul Aviv Nevo’s NVInvestments to invest a total of $23 million in YouWeb Incubator subsidiary CrowdStar, which operates social games through Facebook, tech.qq.com reported on May 24.

Its the second investment of The9 in mobile game industry. The mainland China game operator had previously invested in YouWeb’s mobile social gaming platform OpenFeint and obtained the rights to operate the platform in mainland China, said the report.

(SEE article on CSN: Chinese online game developer The9 invests in mob. app. game developer, Aurora Feint)

The9 CEO Zhu Jun said to Marbridge that the company’s investment in Crowdstar follows its key strategic investments in online game developer Red 5 Studios and California-based mobile game developer and platform operator Aurora Feint. Zhu added that “The9 is in serious discussions with Crowdstar to introduce Crowdstar’s most successful Facebook social games to the China market, and to cooperate with Crowdstar on mobile social games.”

CrowdStar’s active paying accounts on Facebook are worth nearly $30 million, the third highest amount after application developers Zynga and Electronic Arts, according to the report. For paidcontent.org, the company is the fifth largest social gaming app developer on Facebook with 29 million monthly active users. CrowdStar’s games include “Happy Aquarium” and “It Girl”.

Cowdtar closed its first-ever round of institutional funding. According to the company, the proceeds ($23 million) will go towards hiring about a hundred employees such as game developers, server developers, artists, producers, business analysts and content managers. CrowdStar currently has 100 employees, and will double it’s staff. The Burlingame, CA-based company is taking funding a year after acquisition talks with Microsoft broke down. CrowdStar, a YouWeb incubation, was founded in 2008 and has never before taken in institutional dollars.  The company says all of its growth to date has been funded from operating profits. 

Cowdstar want to invest in 2 areas:

. the startup is currently seeing 50 percent of its traffic coming from international markets and its management believes that this number will only continue to grow. In fact, an investment from Chinese gaming company The9 should help the company pursue an international strategy, especially in high growth areas for gaming such as China and Japan.

. mobile is another area where CrowdStar plans to expand to with its new funding, with new social gaming products incorporating location into the gaming experience.

Worlwide strong prospects for social gaming

A recent eMarketer report said that social gaming revenues were $856 million last year, but will experience explosive growth this year, hitting $1.3 billion by 2012. In terms of the shifting share, virtual goods will barely move, retaining a nearly 60 percent share of the social gaming revenue pie with $792 million next year. Advertising will grow from a 14.1 percent share of the market with $120 million spent in 2010, to 20.5 percent share with $271 million in 2012.

SOURCES: Washington Post (23/5/11),  Marbridge Consulting, paidcontent.org, Pacific Epoch (24/5/11) 

IN THE PRESS:

. Intel, Time Warner and The9 make $23M strategic investment in social gaming company CrowdStar (Washington Post, 23/5/11)

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