Tuesday, September 16, 2008

Social Gaming Company SGN acquires (fluff)Friends, the popular virtual pet game.

(fluff)Friends Creator, Mike Sego pictured above enjoying his first acquisition payout.

Due to my tentative reputation as a journalist, I just received news that SGN bought (fluff)Friends.

Hopefully, all my readers know that SGN is one of the top social game developers (and one of the top social game acquirers), but some of you might not know that (fluff)Friends, in addition to being one of the early successes on the Facebook platform is also one of the best monetized games, as well. Unsurprisingly, Slide chose to clone it as SuperPoke Pets on Myspace.

According to ever-cagey (fluff)Friends creator, Mike Sego, the game makes a little over a dollar per month per daily active user (as quoted by Venturebeat). At 90,000 DAU, that comes out to ~$90,000 per month income.

So how much did SGN play for (fluff)Friends? No one is saying, but I suspect that like SGN's previous round of acquisitions (Free Gifts, Nicknames, etc.), Mike was given equity in SGN.

But why would Mike want to join SGN if he already had a $90,000 a month income? Here's the quote from the press release: "We're looking forward to joining forces with SGN to make (fluff)Friends a much greater gaming experience for our users. The SGN team is very creative and focused on building great games and great user experience, which is why we know (fluff)Friends together with SGN will be a powerful combination."

Yeah, I'm guessing that they offered him a lot of stock. :)

By any standard, it's a smart buy for SGN, they get a consistent money-making app with a loyal and stable userbase, but more importantly, they get its creator, Mike Sego, one of the few experts in creating a virtual goods economy on a social network.

I expect we'll see SGN move deeper into a virtual goods monetization model. They already have Zach Allia, creator of Free Gifts, and now Mike Sego. Together, that's some deep expertise.

Here's the value Mike brings: According to SGN, since January 2008, (fluff)Friends has seen a 192% increase in revenue per spender, and a 143% increase in spend per transaction.

By the way, if you ever wondered why the game is named (fluff)Friends and not Fluff Friends, I'm guessing because punctuation marks appear before numbers and letters in directories, so (fluff)Friends would be on the top of the list of apps in the Facebook directory. Yep, Mike Sego is a smart guy.

Disclaimer: Mike is a friend of mine, but perhaps not after I published that picture. :)