Why News Corp. Bought Social Gaming Firm Making Fun

TheDaily and MySpace (NSDQ: NWS) may get all the attention in News Corp.’s digital division, but keep an eye on the company’s growing interest in social gaming. To wit: The Los Angeles Times reported Friday that the company acquired Making Fun, though the actual purchase occurred last November.

News Corp. digital chief Jon Miller has been quietly building up a presence in this fast-growing space. Though News Corp. is better known for shedding assets–MySpace, BeliefNet, Bitbop just to name a few–one of the few acquisitions Miller has made in his time at the company was another social-gaming outfit, Irata Labs.

Call it the Zynga Effect: Even old-media companies have seen the stratospheric rise of the category and want in on the action and out of the expensive, declining console-gaming world. Last July, Viacom (NYSE: VIA) picked up Social Express and more recently unloaded Harmonix, the force behind former juggernaut franchise Rock Band.

Could it be long before an arms race develops in social gaming? Disney (NYSE: DIS), which already snapped up Playdom for a whopping $763 million last year and made its chief executive, John Pleasants, a co-president of its entire Disney Interactive Media Group, will be worth watching here as well. At last week’s investors conference, Pleasants noted that social gaming, which he estimated made up $5 billion of the overall $56 billion gaming business, would grow to $9 billion by 2015, with a compound annual growth rate of 16%.

That’s in comparison to the CAGR of console gaming registering at 4%. Of social, mobile and online gaming, Pleasants told analysts, “Those are the engines and pistons we need to focus on.”

As News Corp. is showing, Disney isn’t the only conglomerate ready to go into second gear.