Machine Zone and its $500 Million Request
Hey GOW Real Tips users!
Recently we learned that Machine Zone is asking potential investors for $500 million with a promised return rumored to be in the billions. That amount of money is insane, but if JPMorgan Chase & Co. contributing $250 million last July is any indication of interest in Game of War: Fire Age, investors will probably flock to this offer and the potential return.
So then, what does Machine Zone need this money for?
As you all know, Machine Zone excels at bombarding everyone, even nonusers with advertisements to drive more traffic to their game. In Kate Upton’s famous, or infamous?, four month ad campaign, Machine Zone spent $40 million to tell the world about Game of War. This paid off when the $4.5 million, Super Bowl XLIX commercial was watched by almost 115 million people, and the subsequent posted YouTube video upload has almost surpassed 10 million views.
Although this a hefty price to pay for hiring the supermodel, Machine Zone has determined that it was extremely effective in gaining the traffic that they wanted to see.
I’m sure that all your friends were talking about Kate Upton for days after the commercial aired even if they weren’t active gamers; some even probably downloaded it just to see what the commercial was all about.
Gabe Leydon, the chief executive of Machine Zone, said in an email, “We do not comment on rumors and speculation about fundraising or valuation, but [Machine Zone] does not need additional investment. We are 100 percent focused on [Game of War] and expanding on the technology that powers it.”
The Wall Street Journal reported in July 2014 that Machine Zone was trying to raise a $250 million round of funding at a $3 billion valuation. That round was never announced, but several sources believe that JPMorgan Chase finalized an investment.
Gabe Leydon denies it above, but Machine Zone is reportedly working on a new game. It might have to, as Game of War: Fire Age is churning through users, and it will eventually run out of new players to recruit. All games have this problem of churn, and we don’t know how severe Machine Zone’s challenges are. But the laws of gravity apply to games. Eventually, all games lose their popularity. Machine Zone has a long way to go before it flashes ads in front of all of the world’s mobile device users in the hopes of recruiting replacement players. But at some point, the heavy advertising is bound to become less effective. We have no idea if Machine Zone has reached a saturation point.
We don’t know if the rumor, reported by TMZ, is true that Machine Zone will replace Upton with pop singer Mariah Carey in an upcoming TV commercial. Carey is reportedly getting seven figures for the commercial, and that might actually be a way to cut the costs of advertising.
Sources: Venture Beat and App Annie