Feb. 11 (Bloomberg) -- Microsoft Corp. is among companies in talks to buy CrowdStar, the creator of games for social- networking site Facebook, according to two people familiar with the matter.

A decision on a sale may be weeks away, and closely held CrowdStar might choose to stay independent with investment from a private equity firm, said one person, who declined to be identified because the talks are private. CrowdStar, whose offerings include the virtual fish-care game “Happy Aquarium,” may be valued at $200 million, the other person said.

Games on Facebook gained popularity in the U.S. last year, prompting Electronic Arts Inc. to purchase Playfish Inc., the maker of “Pet Society” and “Restaurant City,” for as much as $400 million. CrowdStar is the fourth-largest developer of applications for Facebook Inc.’s social network, with more than 50.8 million monthly active users, according to AppData.com, a Web site that tracks application usage on Facebook.

Peter Brooks, a spokesman for Burlingame, California-based Crowdstar, declined to comment, as did Microsoft General Manager Mike Ybarra, who heads the company’s Windows games unit.

The U.S. market for games played on social networks, including Facebook and News Corp.’s MySpace, will triple to more than $2 billion by 2012, according to ThinkEquity LLC. The growth contrasts with a 9.8 percent drop last year for U.S. purchases of games played on Nintendo Co.’s Wii, Microsoft’s Xbox 360 and Sony Corp.’s PlayStation 3, NPD Group Inc. said.

MSN Games

MSN Games, a unit of Redmond, Washington-based Microsoft, offers more than 1,000 online games, including “Bejeweled,” “Mah Jong Tiles” and “Spades.” The Web site competes with services from Yahoo! Inc. and AOL Inc.

This month, Zynga Inc. began letting users of Microsoft’s game site play its “FarmVille” game. San Francisco-based Zynga has more than 232 million monthly active users, according to AppData.

Valuations for Zynga and its peers were established when Electronic Arts bought Playfish, Jesse Divnich, an analyst with researcher Electronic Entertainment Design & Research, said last year. Zynga may be valued at $1 billion should the company be taken public, said Terry Schallich, head of capital markets at Pacific Crest Securities, a technology-focused investment bank.

Games on social networks such as Facebook and MySpace are free. The makers of the titles generate revenue by selling virtual goods.

Microsoft’s Xbox Live online game service, which allows players to access their Facebook accounts, has about 23 million users. The company is trying to develop more online and community-based games, Phil Spencer, the vice president of Microsoft’s game studios, said in July.

Microsoft rose 13 cents to $28.12 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have fallen 7.7 percent this year.

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net; Dina Bass in Seattle at dbass2@bloomberg.net

Last Updated: February 11, 2010 16:36 EST

This would bode well 4 MSFT's Live Anywhere initiative.

Wow damn, $200 million, $400 million and even $1 billion worth for social-networking game companies? That's crazy.

I don't like this. MS shouldn't do this investment. Easy come, easy go.

The upcoming XBLA game Toy Soldiers has a separate facebook game as well. I would not be surprised to see more of this from Microsoft as the do own part of facebook.

This news dovetails into the news coming out about the new mobile OS...apps are going to be huge, and these games are more readily ported to mobile platforms. I'm not sure on that valuation...as $200 million are about 5-6 triple-A titles, but I guess M$ is serious about getting back to at least #2 for mobile platforms...btw...Blackberry is #1 at 41.6%, followed by Apple at 25.6% and M$ at 18%...Google is way down at fifth, with like 5% or so, but with Winmo 7 news hitting the street, I think ALOT of business users are going to stick with BB or jump to this. As for consumers, I think it's going to grab a solid backing as well...we will have to wait to see what Apple does with OS 4 tho.

It's a growing market and they should make a profit by 2012

What do all those numbers stand for lol? They're the marketshare of what?

Platform market share, I assume.  The difference is that BB and Apple have their own hardware and software, where as M$ only had a loose confederation of hardware tied to software...it seems as if WinMo 7 will change that, with M$ being more strigent on the standards for WinMo 7 platforms.  I don't think we will see a Windows Phone, but I do think we will see some standouts. 

$200 million? $1 billion? This is the dot-com bust all over again.

Except that these companies are MAKING money!  Just because most people on this site don't like social media type games, doesn't mean that their is no market place for these products...looking at a game like Resturant City...I know ALOT of people who have been rocking that game hard for almost a year now...think about it...or look at Castle Age...I've only been in it for 1 month, but I'vespent $20...ther eare people playing poker, etc...what do you'll think are the operating and development cost for them...peanuts.