Kara Swisher

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Zynga Buys Austin-Based Challenge Games

Zynga, the online gaming powerhouse, has acquired Austin, Texas-based Challenge Games.

The social game start-up will be renamed Zynga Austin and be focused on product development.

Backed by Sequoia Capital and Globespan Capital Partners, Challenge focuses on virtual goods games, such as “Warstorm.”

Zynga did not reveal the terms of the deal.

The San Francisco-based Zynga has been on a bit of a deal tear of late, inking partnership agreements with both Yahoo (YHOO) and Facebook recently.

Here’s the official release:

ZYNGA ACQUIRES CHALLENGE GAMES

San Francisco–June 3, 2010–Zynga today announced the acquisition of Austin-based social game company Challenge Games. Effective immediately, the Challenge Games office will become Zynga Austin, a game studio focused on product development. Today’s announcement expands Zynga’s studio operations adding to locations already in San Francisco, Baltimore, Los Angeles, Bangalore, and Beijing.

Terms of the acquisition were not disclosed.

“Austin is an ideal location to extend our studio operations with its rich talent in the games business,” said Mike Verdu, senior vice president of Games at Zynga. “We look forward to building out our Zynga Austin studio with the best and brightest in the industry as we continue to bring social games to more users worldwide.”

Challenge Games’ Co-Founder CEO, Andrew Busey, will become Zynga’s general manager and vice president of the Austin studio. The Challenge Games team of 35 employees will be immediately integrated into Zynga’s workforce.

Challenge Games, backed by Sequoia Capital and Globespan Capital Partners, launched in 2007 to focus on immersive Web game development built on a virtual goods business model. Two of the company’s most popular games, Warstorm, a collectible card game set in a fantasy universe, and Ponzi, a tycoon game, will be further developed by the Zynga team.

Today’s acquisition along with Zynga’s recently announced partnerships with Facebook and Yahoo! continues to extend the company’s footprint worldwide, creating more opportunities for Zynga to connect the world through games. Recently, the company announced a promotion with 7-Eleven where stores across the United States and Canada are offering special promotional game gifts with Slurpees® and other items.


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