We're not quite at checkmate,
but Google made moves Wednesday that resembles a strategic chess game. The Mountain View, Calif., tech company shut down services and made strategic acquisitions in everything from social sites to
development tools.
Yesterday, Google shuttered Google Wave for "lack of interest." Then Mike Taylor and Eric
Clayberg at Instantiations, known for its Java/Ajax development tools and Google Web Toolkit (GWT), announced that Google had bought the company. Top that off with reports that Max Levchin, Slide
founder, entered into an agreement with Google to sell the social tool, in a deal to be announced later this week.
The same unconfirmed reports from TechCrunch and The New York
Times place Slide in Google's coffer for a price between $182 million and $228 million, respectively. Slide didn't reply to requests for comment. A Google spokesperson, as usual, says the company
doesn't comment on rumor or speculation. If Google hasn't made the purchase, maybe they should.
Levchin isn't a stranger to big deals and successful startups. After meeting him in 2006, the
brilliance that thought up PayPal with co-founder Peter Thiel was evident. The two sold the online payment system to eBay for $1.5 billion in 2002.
Now Levchin runs Slide, which makes
virtual community apps like SuperPoke Pets and SuperPocus Academy of Magic for social-networking sites like Facebook.
While Facebook gets a cut of virtual goods sold through the network,
paid search ads and in-game ads could become the revenue source for Google's game play. Zynga's revenue from virtual goods sales generated about $270 million in 2009 according to Lightspeed. That means Zynga games kicked in roughly $80 million or 11% of Facebook's total revenue of around $750 million in
2009.
Although Google doesn't break out the percentage or revenue gained from paid click ads on sites running AdSense, in its Q2 earnings release the company stated aggregate paid clicks,
which include clicks related to ads served on Google sites and the sites of our AdSense partners, rose approximately 15%, compared with Q2 2009, but declined 3%, sequentially,
Trip
Chowdhry, managing director at equity research firm Global Equities Research, suggests Google generates more than 90% of its revenue from pay-per-click (PPC) ads across the company's network of sites.
In July, Google reported $6.82 billion for the quarter, end June 30, 2010.
Perhaps virtual goods will supplement any softness in PPC ads throughout the year. Both virtual goods and PPC ads
would integrate well with access to the Internet through Google TV, giving casual game makers and advertisers additional exposure. I talked about what Google's social network gaming platform might look like in July.
MediaPost had predicted in
April that Google's next big thing would become video and social games after the company named well-known
video game guru Mark DeLoura "Developer Advocate." Then the push into Android casual games on the mobile handset heated up. While these acquisitions move Google another step closer to building a
gaming social network platform, with so many missteps in social networks, I have to wonder if success for Google in social gaming remains on the board.