Social Gaming Company Raises Expansion Capital

Social gaming continues to rise in popularity and it’s attracting plenty of capital. Industry leader CrowdStar has raised $23,000,000 to double its workforce and expand globally. Despite setbacks for social gamers on Facebook, the funding proves continued interest in the industry by big investors, such as Intel Capital, Time Warner Investments, NVInvestments, and Chinese game operator The9.

CrowdStar achieved its first successful social game on Facebook in 2009. Happy Aquarium became the third most popular game on Facebook with more than 50,000,000 monthly active users. In the past year, CrowdStar grew from 20 employees to over 100.

Facebook changed its policy in early 2010 for using the platform to conduct spam-like viral marketing. CrowdStar’s audience has slipped to 29 million monthly active users according to AppData. But it still has hits like It Girl competing with offerings from rival Zynga, which provides CityVille and FarmVille.

CrowdStar cites its retirement of the Quiz Planet application – with 17,000,000 users – as the reason for its drop in total user count. That app was aging and not producing an economically viable revenue stream. The company reports that it is still profitable with a stable gaming audience.

As competitive pressures mount in the social gaming market, the new influx of capital is a big vote of confidence for CrowdStar. The company has expanded beyond its Facebook platform to entering the mobile game market in Japan. The new funding permits CrowdStar to expand in places where Facebook is not the dominant social game platform That includes Japan, China, Brazil, and eastern Europe.

This isn’t the first time that CrowdStar has faced challenges. After its 2008 start, most of the company’s games were unpopular. At the same time, competitors attained increasing users. CrowdStar persevered with game testing on Facebook, including ways to leverage revenue from each game. Programming engineers experimented with ways to develop games that were scalable to millions of users.

Valuable lessons were learned from user-generated content after the new company started with limited capital. As a result, CrowdStar has a focus on quickly developing and launching games as well as constantly updating them based upon customer feedback.