Social networking software

Google Assembles Parts for Facebook Rival

It seems only a matter of time before the Internet's version of Clash of the Titans occurs between Google and Facebook. The latest development in this pending collision is a report that Google is negotiating with major game developers for the social media space as part of a move to launch a competitor to Facebook, which recently topped the 500 million mark in membership. Playdom, Electronic Arts, Playfish, and the Zynga Game Network are among the companies reported by the Wall Street Journal in talks with Google.

It shouldn't surprise anyone that Google is huddling with game developers, especially if it intends to launch its so-called "Google Me" Facebook alternative. Social games are hotter than a poker in a blast furnace and would be important to fattening the bottom line of any new Facebook competitor. One of Facebook's most popular games, Zynga's Farmville, attracts 60 million active members a month. What's more, it's estimated that players in Asia spend billions of dollars on the games, while in the United States, ThinkEquity pegs social gaming revenues at $700 million in 2009 and predicts those revenues will triple by 2012. Those fat numbers are not only attractive to Google, but to entertainment heavyweights, too, like Disney, which just purchased Playdom for $563.2 million, plus another $200 million for meeting performance incentives.

An alternative to Facebook would be welcomed by many game developers, looking for a better deal for their wares. Currently, Facebook takes a 30 percent cut of the revenues made by games that use its service. Indeed, the need to diversify has motivated one of Facebook's biggest game developers, Zynga, to cut a deal with Yahoo, and open its doors to a $100 million investment by Google.

In the pending clash of titans, the question remains whether Google can hold its own when it strays into Facebook's turf. If the search giant's foray with Google Buzz into Twitter's territory is any indication of the outcome of such a clash, betting folks had best put their chips on Facebook.

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