Intel Capital is loading up on its social gaming bet with a new investment in top Facebook game developer CrowdStar, which is taking $23 million in its first major funding round. Intel is joined by Time Warner, Chinese game developer The9 and NVInvestments.
The money will help CrowdStar double its headcount of more than 100 employees as it looks to grow in the social gaming space beyond Facebook into mobile and into more international markets. It was incubated at YouWeb, the Burlingame, Calif. company founded by Peter Relan that also helped develop OpenFeint, the mobile social gaming platform purchased by Japanese gaming giant GREE for $104 million last month. Relan is also the chairman and CEO of CrowdStar.
The money should help CrowdStar mount a bigger challenge to Zynga, the biggest game developer on Facebook. According to AppData, CrowdStar is the fifth-biggest game developer on Facebook when measured by monthly active users, with 29 million users a month. It’s a far cry from Zynga’s 248 million active monthly users, but the money should help CrowdStar buy more studios, something Zynga is doing at a torrid pace. It’s pretty remarkable that CrowdStar has been able to grow into a major developer without taking any previous institutional investments. It was able to survive on its operating profits; it had its largest quarter of revenue in the first quarter of this year thanks to games like Happy Aquarium and Happy Pets.
Intel made a previous gaming investment last year in OpenFeint, adding to its growing portfolio of gaming companies with an emphasis on social and mobile. Intel also invested in Digital Chocolate’s $12 million round earlier this year and last year invested in Gaikai, a streaming cloud gaming service, as well as gaming start-ups Transgaming and Vostu.
As we’ve written before, social gaming is very hot especially as it expands to mobile. Big exits by OpenFeint, Ngmoco and others are showing that the market for social gaming on mobile devices is heating up. Intel is likely looking to cash in on that growth with companies like CrowdStar and Digital Chocolate that have the ability to operate on social platforms like Facebook as well as on mobile phones. Eventually, those distinctions will likely blur anyway giving rise to more games that exist on multiple platforms. The investment by The9 should also help CrowdStar expand in China as well.
“Social games are a fast-growing category on connected computing devices, and we believe CrowdStar is well positioned to continue to capitalize on this trend,” said Mike Buckley, managing director of Intel Capital.
This is a growing opportunity as we’ve noted before with a lot of competition brewing between U.S. gaming companies like Zynga and EA and Japanese powerhouses like GREE and DeNA, which have a head start on social mobile gaming. China’s The9 is also proving to be a rising force in the west with investments in OpenFeint, CrowdStar and a $100 million fund for Android developers . I wouldn’t be surprised if CrowdStar’s funding isn’t followed up at some point by an acquisition if it continues its success story. There’s just a lot of interest in this area and plenty of people willing to open their wallets as social gaming goes mobile.