Social media seems to be the boom child of the current flurry of investment and probably represents a bubble that a lot of investors are trying to pile onto. Current valuations place social-gaming developer, Zynga Inc.—the producer of such popular hits as Farmville and Cityville—somewhere between $7b and $10b. Right now they’re holding discussions with potential investors to raise another $250 million in funds for future development and projects.

At first these amounts seem staggeringly huge, until a close look is taken at the rest of the industry. Such as the valuation of other social-media outlets that Zynga depends on to make its games so popular (and thus profitable.) According to an article following the still ballooning valuation of the social-gaming company in Wall Street Journal, they’re riding the even higher valued coattails of sites like Twitter and Facebook,

The discussions are the latest sign of the investor frenzy around a small class of large, fast-growing Web start-ups focused on the consumer market that have yet to go public. Facebook Inc., Twitter Inc. and the group-buying service Groupon Inc. have all recently raised large rounds of funding at sky-high valuations, with some recent discussions concerning Twitter valuing the micro-blogging service at $8 billion to $10 billion. The business social network Linked In Corp. and Internet radio service Pandora Media Inc. recently filed to go public.

Any decision to raise a fresh round of funding by San Francisco-based Zynga, which sells virtual goods in Facebook games, could be weeks away and may not happen, said the people familiar with the matter. Although valuations of the most successful Internet start-ups are getting pricey—topped by Facebook’s eye-popping $50 billion value in its latest round of funding—part of Zynga’s appeal is that it has tapped into a lucrative method of making money online.

After citing Facebook at $50 billion in valuation it makes Zynga’s potential $10 billion seem less of a blow—although they both look extremely high currently. As a social-gaming company, Zynga has done an excellent job for itself and in fact has discovered a highly lucrative relationship with social-media. In fact, both Facebook and Zynga benefit hugely from their relationship; the sale and distribution of virtual goods has proved itself to be a vastly marketable enterprise.

However, those goods would not be so worthwhile without a mechanism for spreading the word (which Facebook and Twitter do excellently.)

Zynga has also made its rounds in getting into the mobile market. They’ve devoured multiple acquisitions to make this happen, and are looking to Android 3.0 to help spread their influence. Social-media sites like Facebook and Twitter already depend highly on the connectivity of customers to make use of them not only when they’re at their computers at home, but on-the-go as well. Zynga’s penetration into the hearts and minds of its players has largely been to develop a relationship between them and their virtual “pet community” be it a farm, city, whatever.

It’s like having one of those key fob virtual pets that cries at inopportune times; except that with Zynga people get to purchase things for their simulated farm and can check up on how its doing while on the bus headed home just by tapping a few keys on their phone.

This sort of psychology has a lot of inertia behind it and Zynga has done a brilliant job following in its wake.

If it weren’t obvious that social-gaming were the next-big-thing that could help seal the future of a lot of these social media sites, it should be now. Recent hype about MySpace potentially buying their way into social-gaming with MocoSpace continues to show how brightly the market fires are burning.