The announcement yesterday that Hasbro acquired 70 percent of Backflip Studios for $112 million is great (and well deserved) for the Backflip team but potentially disastrous for many mid-level social game companies. Backflip has a history of successful—and profitable—games, highlighted by DragonVale, one of the most successful games in iOS history. The game launched in 2011 and still in the top 15 in the top-grossing charts.
The valuation bodes poorly for other social mobile game companies. Given the $112 million purchase price for 70 percent, the Backflip team accepted a valuation of $160 million. There are many, many, less successful mobile game developers who have taken significant amounts of venture capital at valuation two to six times the valuation Hasbro paid for Backflip. How could a company that does not have a franchise as strong as DragonVale argue it is worth more than $160 million? Continue reading “The real takeaway from Hasbro’s acquisition of Backflip”
The Business of Social Games and Casino 