Zynga's travails are proving to be a windfall for competitors.
Less than two weeks after the gaming kahuna announced it would lay off more than 500 employees, Los Angeles-based SGN -- run by MySpace co-founder Chris DeWolfe -- will announce Thursday that it's buying another Southland game studio, Mob Science.
The latter had bet heavily on Zynga.com: Mob Science raised a $1 million seed round in early 2012 to make games for that platform, which was supposed to lessen Zynga's reliance on Facebook for its customers.
But with Zynga's revenue (and share price) continuing to plunge, CEO Mark Pincus has said his team will focus on fewer games. That left Mob Science scrambling for a partner with the distribution network and deep pockets to promote its products.
DeWolfe said Mob Science "built beautiful games but just didn't have the muscle or manpower to properly launch them." Bringing the studio's existing titles, which include "Legends: Rise of a Hero" and "Coffee Bar," to the 20 million monthly active users SGN claims will "reignite" those games, DeWolfe believes.
More important, the 11 employees who are coming over in the transaction are already working on new games for SGN. Both companies, he added, draw a heavily female demographic.
Zynga's meltdown will spell continued opportunity for smaller gaming platforms, said Josh Williams, president of a San Francisco firm called Kontagent that helps online game makers (including SGN) better understand how users interact with their offerings.
DeWolfe wouldn't disclose the deal's price tag, although he said it was "a little" smaller than those of other acquisitions he swung in 2010 and 2011 to stitch SGN together from three different startups. While those purchases -- the largest of which is believed to have topped $10 million -- were bankrolled by Austin Ventures, DeWolfe said: "Now we're able to make acquisitions based on the cash in our bank. Revenue numbers have doubled every year, and we're profitable."
MySpace has gotten plenty of grief for letting Facebook sneak up on it, but DeWolfe's bet that he could build a superior gaming model to Zynga's is now looking prescient. While Zynga rode to the top of the social gaming heap via its dependence on Facebook, DeWolfe built SGN to be platform-agnostic, so users could play its games on social networks, mobile devices or the Web.
Even as Pincus tries to push Zynga into a multiplatform strategy, Williams said upstarts like San Francisco's Kabam are far ahead, especially in the transition to mobile gaming. "Social gaming's still growing very rapidly, but it's across many platforms now," he said.
DeWolfe said the majority of SGN's revenue currently comes from mobile. The company's headcount tops 80 people -- including a skein of recent hires from Zynga.
Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.