RockYou purchases game developer Ryzing

Ryzing is the developer of popular Bingo game; users play with real money for prizes

Online gaming has become so popular that a recent study found that nearly half of smartphone users in the top five European markets play games on their phone. With such a big market, the real question becomes, how do you make the most money out of it?

Sure, some of the games may cost a dollar or two to purchase, and then there is revenue made from ads, but in the U.S. it can be harder to find ways to make money because of restrictions on gambling. Now, one company seems to have found the answer, and also a new partner to help them along. 

Social entertainment RockYou has purchased game developer Ryzing, the company announced Wednesday. The financials were not disclosed, but RockYou CEO Lisa Marino tells VatorNews it was for both cash and stock.

The two companies formed a publishing agreement in January, with RockYou in charge of ad sales for Ryzing. Marino says the company became interested in Ryzing’s Bingo game because of its unique rewards-based gaming platform, in which users play with real money.

This is something that no other gaming system does, Marino says, and it intrigued the company so much they decided to purchase the game and its developer. The prizes in the Bingo game are reward based, which helps sidestep gambling laws. The game allows Facebook users to pay to enter bingo games to win prizes through a sweepstakes drawing. Prizes include cash and luxury vacations. 

The sweepstakes model of the game brings in extra revenue; currently Ryzing makes 35-40% of its revenue from advertising, while the rest comes from its gaming platform. The new source of revenue will go a long way in boosting monetization for RockYou.

“This combination of the new reward-based gaming platform and the company’s existing powerful monetization model makes RockYou a truly unique social media company,” said Molly Gerth, representative from TriplePoint, RockYou's PR firm.

Redwood City, California-based RockYou was founded in 2006. Marino and her team are the developers of the popular Zoo World game series.

The company, which currently employs 74 people, makes money from the sales of digital goods, as well as from selling advertising space. For example, Marino says that the company makes 35% of its money on Zoo World from ad space, and the other 65% from digital goods.

Now, with the additional revenue that will come from the new gaming platform, RockYou will be able to increase monetization and expand the new type of gaming platform that Ryzing has created.

Since 2006, RockYou has raised a total of $130 million in four rounds of funding. From Q1 to Q2 2012, RockYou saw 20% growth in ad revenue.

RockYou also announced that it is moving headquarters from Redwood City to San Francisco this month.

Other gaming acquisitions in 2012

There have been a number of large gaming acquisitions this year.

GREE purchased Funzio for $210 million in May.

Among some of the other recent gaming aquisitions are IGT's purchase of Double Down  for $500 million in January. Double Down was estimated to be generating $50 million a year in revenue. In March, Big Fish Games bought Self Aware Games for an undisclosed amount.

Perhaps the biggest news this year was when Zynga purchased OMGPOP, the developer of Draw Something, in March for $180 million. Zynga was also rumored to be going after game developed Glu.