FEB. 26, 2011 • After many starts and stops over the years, Rupert Murdoch is returning to the video game business. His News Corp.’s Digital Media Division purchased Making Fun, a social-game startup headed by Lee Crawford who helped cofound Twofish, and PlayFirst cofounder John Welch. Making Fun will be tasked with developing games for social networking and mobile platforms.
Impact: News Corp.’s high profile investments in social networking and the game business have not quite panned out as expected. In 2005, News Corp. bought MySpace, at the time the leading social network site, for $580 million. At the time it seemed like a bargain, but MySpace has been eclipsed by Facebook and is now hemorrhaging money. News Corp. has hired Allen & Company to try and unload MySpace. Also in 2005, News Corp made a major investment in the game space by buying game media company IGN Entertainment for $650 million. A key asset of IGN was the Direct2Drive digital distribution service. However, like MySpace, Direct2Drive saw a competitor grab the vast bulk of market growth. In this case Valve’s Steam service. The deal with Making Fun is a much smaller investment in a startup company. In this case it is a chance for News Corp to get in on the ground and try and build a company from scratch. It will be interesting to watch how this much different approach works.