In the past twelve months, Zynga Inc has struggled with a contracting
player base, a deflated stock price and waves of layoffs. Now it is
coming to terms with downsized ambitions.
As Chief Executive Mark
Pincus, 47, leads the online games developer he founded in 2007 through
perhaps the most crucial year of his tenure, he is pushing to restore
revenues by doubling down on "FarmVille," the franchise that took
Facebook users by storm four years ago and launched Zynga to stardom.
some industry observers had declared farm simulation games a fad and
predicted FarmVille 2's early demise, the sequel to Zynga's best-known
title has defied expectations at its San Francisco headquarters, Pincus
said in an interview. FarmVille 2 has clung to its perch near the top of
Facebook charts and the number of people who play the game each day
still hovers near all-time highs of 8 million, even six months after
Given a glaring weakness in mobile games, however, one of
Zynga's current priorities is porting FarmVille 2 to mobile devices so
players can move from PCs to smartphones and back without losing their
data. That presented technical challenges that the company is ironing
out, Pincus said.
"The ideal is to make that one seamless
experience between Web and mobile so you can take your farming
experience from work to home," Pincus said. "We're having to retool and
reinvent around our process and technology."
Pincus badly needs a
reliable hit franchise. In the past nine months, Zynga has shuttered 20
titles and closed offices in Baltimore, Boston and Tokyo. It has trimmed
5 percent of its workforce, though its headcount of nearly 3,000 still
dwarfs that of fierce rivals like Supercell, a Finnish company with 100
people that claims an equivalent amount of revenue, or the 600-strong
Rovio, the publisher behind the "Angry Birds" games.
Gone is the
swagger that defined the early years, when Zynga's army of developers
flooded the market with dozens of new titles from cooking games to bingo
variations, its dealmakers splashed money to snap up smaller rivals,
and its managers opened studios in cities around the world.
Street is viewing Pincus' shift with cautious approval, having been
singed by Zynga's abysmal stock performance - an 80 percent decline over
the past year that began around the time it invested $180 million in
then-promising game studio OMGPOP.
"Certainly their shareholder
base wants to see more discipline," said Sean McGowan, an analyst at
Needham and Co. "When you have limited resources, it makes sense to
start with a proven winner, then expand that franchise. But it needs to
be a blend of sticking with the proven brands and realizing when people
might say: 'FarmVille 4? No, I'm done with that.'"
much stock on Zynga's future prospects in Internet gambling, because of
its massive poker-playing community and existing game software. But
with meaningful income from real-money casino efforts likely to be
months, if not years, away, it may have to risk "sequelitis" for now.
Almost 18 months after going public, Zynga is staving off fierce competition from newer or nimbler rivals that mimic its games.
founded in 2010, has scored with "Hay Day," an iPad game that contains
elements resembling FarmVille. With just one other game under its belt,
Supercell says it is on track to make more than $800 million in revenue
this year, roughly equal to the $860 million that Wall Street expects
from Zynga in 2013.
Veteran video games publisher Electronic Arts
Inc, one of Zynga's earliest rivals, in recent weeks said it would lay
off an undisclosed number of employees and focus on core franchises like
Battlefield and sports titles.
Activision Blizzard Inc, another
publishing heavyweight, has fared better thanks to the strength of
series like "Call of Duty," which has brought in more than $8 billion in
cumulative sales since the first title launched in 2003. Yet even
Activision is struggling to sustain revenue growth.
bottom-line could be shored up through a more streamlined pipeline,
Pincus argued. Since FarmVille first launched, it has gradually honed
its development process to reduce the resources and development costs
required for each significant update by more than 80 percent, he said.
long as our players are interested in farming, we'll offer a
Farmville," Pincus said. "It could be the Seinfeld of our era in gaming,
a multi-season show that has a quality and a consistency that you can
Zynga declined to address its game pipeline. Bing
Gordon, an investor at venture capital firm Kleiner Perkins Caufield
& Byers and a Zynga board member, said he has repeatedly nudged the
company to develop FarmVille 3.
"Coca Cola has learned not to
change their formula," said Gordon, a game industry veteran who formerly
served as chief creative officer at Electronic Arts. "If you've got
something people want, keep doing it."
Even as Zynga seeks greater efficiency, it acknowledges it has been pressed to invest more to stay competitive.
the heart of the company's strategy has been its "bold beat" schedule, a
roadmap first laid out by Pincus in 2009 to release significant
upgrades and new features to games every quarter to keep players hooked.
criticized in the industry for low-quality graphics and rudimentary
gameplay, the company's latest launches and "bold beats" have placed a
greater emphasis on elements like visuals that were once considered
superfluous, game designers said.
"Player expectations are higher
than they used to be," said Zynga Senior Vice President Todd Arnold, who
overseas FarmVille and FarmVille 2. "You're not able to launch a
minimalist product as we used to be able to."
For its leading
franchises, the company is also investing more in quantitative and
analytical tools. Every week, it shuttles players into a room deep
inside its offices, where they are shown minute new design features.
Their reactions are recorded by video cameras as well as a team of game
designers sitting behind a two-way mirror in an adjacent room.
The company also holds periodic panel discussions with its most loyal fans to solicit suggestions for new features.
Zoccolli, a retired daycare business owner in Moraga, California,
suggested at a session in March that water was too scarce a commodity in
FarmVille 2. Weeks later, she noticed the game began to feature
She has spent three hours almost daily for the past eight months tending her plot but hasn't found it repetitive.
"As long as they come out with new quests, new items, it keeps it interesting," she said.
© Thomson Reuters 2013