In Chris DeWolfe's new venture, sources say, he'll attempt to snowball a bunch of social-gaming properties and pit himself against industry leader Mark Pincus of Zynga.
Caroline McCarthyFormer Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
Now, several well-placed sources have told CNET News that DeWolfe intends to make a move in social gaming, a red-hot space currently dominated by the Mark Pincus-headed Zynga, and that his "roll-up" plans involve buying up a number of smaller social gaming companies so that he and Pincus can go directly head-to-head.
We don't know what kind of progress DeWolfe, who did not reply to a request for comment, has made in securing that private equity money he was reported to be hunting for this summer. We don't know what the company's name will be--if he's settled on one yet. Nor do we know which smaller companies he wants to agglomerate.
But social games are on the brains of multiple ex-MySpace bigwigs, who were able to witness from the front lines the explosion of the industry when game developers started tapping into the viral channels on big social networks. Another MySpace executive, Jason Oberfest, left the company after just over a year to join social gaming start-up Ngmoco.
One source said that Ngmoco's valuation may already be too high for DeWolfe to consider it for his roll-up plans. Rather, DeWolfe is likely looking at very small gaming companies run by a handful of stellar developers but that lack the legal, business development, and dealmaking resources to make any kind of a dent in the current social-gaming market. He also may be looking at companies that had some initial buzz but have since seen their growth plateau or drop off.
We hear that in the months before DeWolfe's departure from MySpace, there was a lot of talk of gaming as the social site, rapidly losing ground to Facebook, attempted to refocus itself as an entertainment destination. When DeWolfe was in charge, MySpace inked a deal with casual-games maker Oberon to power a gaming platform, but that deal is no longer in place. (We've contacted Oberon for comment.)
Things couldn't be more different in the social-media industry at large, where gaming is currently front and center. While there was early on a close rivalry between two companies, SGN and Zynga, the far and away leader right now is Zynga--which is pulling in between $100 and $250 million in revenues depending on which industry blog you read, and spends tens of millions of dollars each year just buying up Facebook ads for marketing.
Most other companies in the space are easily several orders of magnitude smaller. Trying to make inroads when there's already a clear, formidable leader is difficult, and the economic climate means the private equity sector might be skeptical about handing a blank check to someone because he happens to have CEO experience.
What we have heard, though, is that DeWolfe already has someone to model himself on: Rupert Murdoch, the News Corp. CEO whom DeWolfe was reportedly very close to during his tenure at MySpace. With a roll-up of acquisitions, he would plan to do for the gaming industry what Murdoch did for newspapers: pluck them up across the industry, and build an empire.