WSJ reports that Google is preparing to launch a gaming social network to take on Facebook.
Google Inc. is in talks with several makers of popular online games as it seeks to develop a broader social-networking service that could compete with Facebook Inc., according to people familiar with the matter.
Google has been in discussions with top developers to offer their games on a new service it is building, these people said. Those developers include Playdom Inc., Electronic Arts Inc.’s Playfish and Zynga Game Network Inc.—a company in which Google recently took a financial stake, these people said.
It is unclear when Google may launch the new gaming offering and the plans aren’t finalized, but people briefed on the matter said the games would be part of broader social-networking initiative that is under development by the Mountain View, Calif., company.
In an interview this week, Google Chief Executive Eric Schmidt declined to confirm the development of a social-networking service that would incorporate social games, rumored to be called “Google Me.” When asked if Google’s service might resemble Facebook’s, Mr. Schmidt said “the world doesn’t need a copy of the same thing.”
Google’s push into social games represents the latest attempt by the Web-search leader to capture users and advertising dollars that are increasingly flowing to social networking, an area dominated by Facebook, Twitter Inc. and others.
For social-game developers, a successful Google offering would mean they wouldn’t be so heavily dependent on Facebook, where the vast majority of users access the games. Consumers’ appetite for social games is booming— Zynga’s “Farmville” game has more than 60 million active monthly users—and that is attracting bigger players looking to tap new sources of growth. On Tuesday, Walt Disney Co. acquired Playdom for $563.2 million plus up to $200 million more if performance targets are reached. And retailer GameStop Corp. agreed to buy online game distributor Kongregate Inc. for an undisclosed amount.
Disney CEO Robert Iger said Tuesday in an interview that his company views social games as a way to reach consumers in a fragmented media landscape. “People are consuming product in new destinations, on new devices,” Mr. Iger said. “You’ve got to put your product on those devices.”
Social games are less complex than those played on consoles like Microsoft’s Xbox 360 or Sony PlayStation 3. Individuals use the games to interact with online friends in their networks. The developers make money through advertising and by offering users a way to pay for virtual goods in their games that could, for example, help them manage a virtual farm or defeat rival mobsters.
Game developers pay Facebook 30% of the earnings from virtual-good purchases in their games. Google already has an online payment mechanism called Checkout that, in theory, it could use to collect payments for social games on its platform.
A Facebook spokesman said the company wouldn’t speculate about Google’s initiative but said the company expected new social-networking efforts by others and “looks forward to seeing what others have to offer.”
Social gaming is clearly the future of gaming and a key driver for the social networking industry. It has one of the most profitable business models on the web. Recent moves by Google and Disney testify this. Expect more moves from other media companies.