Social gaming pioneer Zynga poised to go public

Pundits say its market value could reach $ 20 billion (U.S.) right out the door. But a company that sells imaginary cows really be worth more than Sony?

Perhaps, says Jeff Tseng, president of Kontagent based in San Francisco, which helps decision makers better understand how online game users interact with their offerings. He argues that Zynga is "really an analytics company, not a game company."

The 230 million people who play Zynga games each month are not just hand over real dollars to buy digital muskets, tractors and other furniture for their virtual worlds. They also provide the company with a wealth of data about their online activities.

Citing the period known as quiet ahead of its IPO, Zynga declined to comment on this report. But in documents filed with the Securities and Exchange Commission, Zynga says it harvests more than 15 terabytes of data from its users-enough to fill the hard drives of laptops every 45-days.

The company beat the data to test new features, target advertising and decide which customers are likely to spend more. "Just as Wal-Mart is known for being very sophisticated with how they merchandise from their shelves, with elements that are most likely to be sold near the cash lanes, has developed sophisticated algorithms Zynga" said Justin Smith, founder of Inside the network.

The market Palo Alto, California-based research focuses on social media and mobile applications. This "secret sauce," as long-term observers algorithms Zynga, helps the company to attract users back once they are bored with a game, a decoy to try new titles and to encourage them to to share games with friends.

"These are functions of thousands of little things that are buried in billions of data points," said Dwight Merriman, who helped create the online advertising in 1995 as co-founder of Doubleclick. Merriman, now CEO of open-source database company 10gen, note that it is only over the last two or three years that the Internet companies were able to analyze user data to the point, thanks to falling costs of storage and the emergence of faster, more powerful computer processors.

Zynga observers predict the coming year will see the delivery company advertising more, using his analytical skills to target ads to specific customers. Observers expect an increase in the "mark" virtual goods such as Best Buy recently offered a smartphone CityVille and product placement tie-ins with the likes of McDonald and Lady Gaga.

"Post-IPO, moves like rise of the advertising game will become more common," said Justin Molavi, an industry analyst with IBISWorld games in Santa Monica who said the gaming industry will take three social, $ 8 billion this year Zynga with the collar the lion's share.

He said the in-game advertising: "Even though they may think it takes away from the user experience, once the company hits the public market, decisions are often made with shareholders in mind."