Zynga to Create Google Games

Internet giant Google has announced that they have acquired a massive sharehold in Zynga, makers of games like FarmVille and Mafia Wars, as they attempt to compete with both Yahoo and Microsoft over the market for Internet social-based games.

After pouring several hundred million dollars, somewhere between the ballpark of $100 to $200 million, into Zynga, Google has actively been recruiting for staff to head a new gaming division for the company.

One source, goes into more detail:

The investment was made by Google itself, not Google Ventures, say our sources, and it’s a highly strategic deal. Zynga will be the cornerstone of a new Google Games to launch later this year, say multiple sources. Not only will Zynga’s games give Google Games a solid base of social games to build on, but it will also give Google the beginning of a true social graph as users log into Google to play the games. And I wouldn’t be surprised to see PayPal being replaced with Google Checkout as the primary payment option. Zynga is supposedly PayPal’s biggest single customer, and Google is always looking for ways to make Google Checkout relevant.

And there’s more. These same sources are saying that Zynga’s revenues for the first half of 2010 will be a stunning $350 million, half of which is operating profit. Zynga is projecting at least $1 billion in revenue in 2011, say our sources. This blows previous estimates out of the water.

Zynga continues to work on high level strategic business development deals. The reason these deals are so attractive to companies like Yahoo and now Google is this – Zynga allows them to rebuild the massive social graph, currently controlled by Facebook. For whatever reason people love to play these games and get passionately addicted to them, coming back day after day. That’s helped Facebook become what it is today. Google, Yahoo and others want some of that magic to rub off on them, too.

Although it remains to be seen on whether or not Google will be bringing anything other than browser-based games designed to hook casual gamers, keep in mind that the company does own the Android OS. Could Google finally rival the Apple’s extensive library?