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Social gaming and online poker: The Zynga factor

Social gaming may be the future of online poker. And there’s one company that’s taking social gaming to dizzying new heights: Zynga, the social gaming home of FarmVille, Mafia Wars, Zynga Poker, and many other ridiculously popular games.

Because it’s not for cash, and because it’s played through social media sites, Zynga Poker isn’t really a standard online poker site, and not yet part of poker affiliate’s marketing arsenal. At least, not yet.

But it’s so popular that if the U.S. government chooses to regulate and license online poker — which looks more and more likely, and even inevitable — then Zynga will suddenly have the branding power and market share to not only jump in the cash poker gaming market, but maybe even dominate it, too.

What makes Zynga special? The site, “unlike so many other Internet darlings, is profitable,” according to the Christian Science Monitor.

Zynga recently filed to raise $1 billion in an initial public offering (IPOA), which is being called “the biggest Internet IPO since Google.” At that time, the company reported that its annual revenue jumped from $19 million in 2008 to $597 million last year. And in the first three months of 2011, Zynga’s already raked in $235 million.

Those are profit margins most companies would love, but what makes Zynga a special case is because its business is built largely on poker — currently a bit of a controversial topic in the U.S.A.

The Facebook connection, and social gaming

Zynga’s gotten famous through its association with Facebook, where most players access its games, and are able to win or lose money via Facebook credits.

But winning and losing isn’t really the main point — at least, not like it is on PokerStars or PartyPoker. That’s why the company is called “social gaming”. The emphasis isn’t on winning lots of money at poker, it’s on getting together and playing a fun game with friends.

“What Facebook has done is open up gaming to a much wider audience – it has provided a platform for people who wouldn’t even normally consider themselves gamers,” said gaming analyst Justin Smith. “It’s changing the way that the gaming business is going to work. This is the biggest revolution in the gaming industry in quite a while.”

For its part, Facebook is headed for $1 billion in revenue in 2011 from social gaming, according to Internet analyst Kevin Ryan (via Reuters).

So big is this “social gaming” phenomenon that left-behind social media sites like Friendster are using it to reinvent themselves. A new beta version of Friendster was recently launched that changes the site’s emphasis almost completely to social gaming.

The affiliate angle
With all that popularity, and its reliance on Facebook to deliver its games, it’s hard to predict just where Zynga is heading.

What’s easier to predict is that the trend of social gaming is crossing over into the cash-money online poker gaming world.

It’s already happening, actually. Virgin recently made a splash with a new version of its online poker game that emphasizes social gaming. PokerStars is doing the same. These companies realize that the future of online poker means a crossover between social gaming and standard for-cash online poker websites.

How can affiliates take advantage of Zynga and social gaming’s surge in popularity to power their own affiliate marketing plans to greater heights?

  • Watch Zynga. See what happens when the IPO hits, and if the company makes plans to integrate cash games and its own system separate from Facebook.
  • Watch Facebook. If new laws happen in the U.S., Facebook would probably quickly adjust its policies to allow more poker gaming. If that happens, Zynga may face a lot of likely competition.
  • Watch the international poker rooms. Caesars Entertainment has purchased a social network to get ready for when online poker is legal and regulated in the U.S. PokerStars has already moved in that direction, too. Make sure the poker affiliate programs you promote are capitalizing on this trend by offering social gaming (such as 888’s PokerCam).

What’s next?
Meanwhile, all eyes are on Zynga. Will the company continue to grow at this rate? Or is it overreaching in its quest for a $1 billion IPO offering?

Whatever happens, Zynga’s current success, as CBS notes, is “not too shabby for a company that builds cartoon-y worlds where real people buy fake money to play pixelated games.”

What do you think?
Do you fear the coming Zynga revolution? Or do you think the company’s just the latest fad? Is this attention on social gaming likely to help or hurt the online poker industry? Sound off in the comments and let us know your thoughts.