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Facebook to earn $1 bn in social-gaming

Facebook's more than 500 million active users are attracting a lot more ad dollars.

Written by Reuters | New York | July 2, 2011 9:49:43 am

Facebook Inc is on course to generate $1 billion in revenue this year from social gaming,according to Kevin Ryan,a leading Internet entrepreneur and former chief executive of online advertising giant DoubleClick.

Most of that revenue will come from advertising,Ryan estimated in an interview this week.

The $1 billion forecast also includes revenue from Facebook Credits,which allow users to buy items for games and other activities on the social network,he added.

Ryan is now chief executive of luxury flash-sales company Gilt Groupe,but he invests in other Internet businesses including news website The Business Insider and 10gen,which runs MongoDB,a database that’s popular with start-ups.

Ryan’s brother,Sean Ryan,became director of gaming partnerships at Facebook in early 2011.

Facebook’s more than 500 million active users are attracting a lot more ad dollars as companies step up online marketing. Research firm eMarketer estimated in January that ad spending on Facebook would exceed $4 billion this year. That’s more than double levels of 2010.

A big chunk of that ad revenue comes from social games that are played on Facebook’s platform.

“Assuming Facebook is on track to produce $4 billion in ad revenue this year,$1 billion of that coming from social gaming is not outlandish,” said Paul Verna,a senior analyst at eMarketer.

Facebook is a private company and doesn’t disclose financial information. A Facebook spokesman declined to comment on Friday.

Zynga Inc,the dominant developer of social games played on Facebook,filed for a $1 billion initial public offering on Friday.

Zynga disclosed that it generated $235 million in revenue during the first quarter of 2011,more than double the same period a year earlier. That level of sales and the growth rate suggest Zynga is on course to generate more than $1 billion in revenue this year.

“We generate substantially all of our revenue and players through the Facebook platform and expect to continue to do so for the foreseeable future,” Zynga said in its IPO filing on Friday.

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