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No Respite in Zynga's Decline

No Respite in Zynga's Decline

Fri 27 Jul 2012 6:48am GMT / 2:48am EDT / 11:48pm PDT
Social NetworkFree-to-Play

The company's apologists better have new excuses at the ready; this week's results were miserable

Plenty of companies in the games business are contentious in their own ways - just look at the heat generated on specialist games websites every time anyone from EA or Activision opens their mouths in public - but few have ever polarised viewpoints quite as much as Zynga. The company is alternately lauded as the vanguard of the new games industry model or roundly condemned as exploitative and unoriginal; its adherents believe that it's going to overcome present market difficulties to become a long-term industry giant with a fervency that feels worryingly ideological, while its detractors often rub their hands with thinly disguised glee at the prospect of a fall to ignominy for Mark Pincus and his ilk.

"Hard evidence suggests that this isn't a company that's going to turn out to be an industry leader"

When feelings run high, it's hard to evaluate a company's performance objectively - there's a tendency instead to try and appear "uninvolved" by coming down firmly in the middle, which is not so much statesmanlike as simply a useless exercise in fence-sitting. So instead, let me start by saying that I wish no ill will to Pincus and his merry band - but I certainly think that his company is facing immense problems right now. Zynga's cheerleaders may wave their pom-poms all they like, but hard evidence suggests that this isn't a company that's going to turn out to be an industry leader.

Why do I say that? A variety of reasons - some of which I've talked about in earlier articles on the topic, but many of which are exposed (or enhanced) by the company's rather grim second quarter results, announced earlier this week. There were bright spots in this report, especially in terms of growth of player base (although there's a major caveat to that which I'll address in a moment), but not remotely enough to make the firm's investors or market watchers feel happy with the situation.

Let's look first of all at what Zynga itself presented as the reasons for its troubles, in a telling paragraph of excuses which preceded its downgraded projections for the 2012 fiscal year. "Delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something."

Let's put some context around that. Zynga is a company that's intricately wedded to the Facebook platform. There's a strong (if harsh) argument which says that the only true masterstroke Mark Pincus has ever come up with at the company is the ruthless exploitation of Facebook's unregulated and open-to-abuse social graph in order to cross-promote networks of games between users, back in the Wild West days before Facebook cracked down on application spam on its networks. By the time the crackdown came, Zynga was deeply established as the biggest provider of games, and could continue to cross-promote within its own games to shuffle players around its ecosystem rather than losing them to competitors' games. If that sounds like it was resting on its laurels, well, that's because that's precisely what it was doing, for the most part.

Meanwhile, virgin territories were opened up elsewhere and Pincus completely failed to seize the moment. iOS and latterly Android have become the dominant platforms for growth in social gaming (not necessarily for social gaming itself, but all the growth is on mobile, not on the web). Zynga sat back heavily on its Facebook success, allowing faster, more nimble companies to land-grab on mobile - a land-grab encompassing not only users, revenues and reputation, but also the experience required to build successful social products on mobile.

"Zynga's symbiotic relationship with Facebook is crumbling, and the only two escape routes - new product releases or acquisitions in the mobile space - aren't working out"

So when Zynga says that the Facebook environment is "challenging", what it means is "the sky is falling". That sounds dramatic, but it's no exaggeration. A huge proportion of Zynga's business flows through the Facebook platform, and if it's hitting growth barriers on that platform - either due to a slowdown in Facebook's own growth, or new policies which keep aggressive games-related posts off most users' timelines, or even due to more aggressive competition from rival game makers - then that's disastrous, because Zynga has nowhere else to go right now. I'm not sure very many blacksmiths reacted to the advent of the motor car by announcing that the horseshoe environment was "challenging", but their more colourful language would have meant exactly the same thing.

The other two aspects of that telling paragraph explain why Zynga has nowhere else to go. Draw Something has collapsed since being acquired by the company - probably largely because the concept itself didn't have much long-term potential for players (there was a distinct lack of a goal or reward system to keep people engaged), although it would be interesting, in this era of deep social interconnectedness and fragile reputations, to see if the downturn was spurred by the negative word of mouth which sprang up around the game at the time of its acquisition by Zynga. This was perhaps Zynga's most high-profile mobile acquisition, and its failure suggests that the company still lacks a basic awareness of what's working on mobile, why it's working, and how to make it keep working.

Then there's the news that product launches are being delayed. That's standard for any company in this business, of course - game development timelines aren't straightforward or easy to manage, and the biggest and most experienced firms experience slippages. However, the contribution to the overall picture is clear. Zynga's symbiotic relationship with Facebook is crumbling, and the only two escape routes - new product releases or acquisitions that propel it into the mobile space - aren't working out. Beyond blind faith that "Zynga is really big so it'll be fine", which of course explains why big companies never fail (which is why my insurance is with AIG, my power comes from Enron, my car is from General Motors and I can't wait for the next Atari console to come out), I'm not sure how Zynga's apologists process that one.

How about those bright spots, though? Zynga's monthly active users (MAUs), one of the key metrics that's emerged as a measure of success in the social age, are up 34 per cent year on year, after all - rising from 228 million back in 2011 to 306 million in the same period in 2012. If Zynga's resting on its laurels, then those are surely some pretty comfortable branches they've found to sit on?

Except that when you look more closely, there are caterpillars on the laurels. In the same period, another statistic - Monthly Unique Payers - also rose, but it only rose by 16%, from 3.5 million to 4.1 million. That's a really important figure, because it encapsulates the number of Zynga's customers who actually paid for stuff - forking over money for energy boosts or items in the company's games. There's a temptation to say Zynga has 306 million "customers" because of its MAU figure, but the reality is that the company has 4.1 million customers - and 301.9 million users whose participation in the firm's games is a net marketing expense, not a positive contribution to the bottom line.

That's okay, sort-of. Free-to-play mechanics mean that you expect the vast majority of users to play for free, effectively acting as cost-effective marketing to entice the small minority of players who'll pay money and make the service profitable overall. However, in Zynga's case, the trend is all wrong. Back in Q2 2011, 1.5% of Zynga's players were paying money for things. A year later, the figure is 1.3%. That 0.2% figure may not seem like a lot, but it's a trend moving in the wrong direction - and it actually translates to about half a million players who ought to be paying, if Zynga could maintain its ratios, but aren't. Moreover, that isn't being compensated for by "whales" dragging the average expenditure of the paying players upwards - in fact, the company's average income per DAU (Daily Average User) dropped by 10% year on year. In short - costs are up, and revenues aren't rising to match them. Those laurels don't look quite so comfortable now, do they?

"Zynga talks about reaching record audiences - but that's worse than useless if you're losing your touch when it comes to monetising those audiences"

Zynga is still talking a great game when it speaks to the markets. They talk about reaching record audiences - but that's worse than useless if you're losing your touch when it comes to monetising those audiences. They talk about building a huge mobile gaming network, but have done so through some fragile acquisitions whose success they seem unable to replicate. With extraordinary chutzpah, they claim that they've got a window of opportunity to create a social gaming revolution on mobile just as they did on Facebook - a claim which both overstates the company's role in the establishment of Facebook social gaming, and ignores the fact that plenty of far more experienced companies are already way ahead of Zynga in that regard on mobile. Unsurprisingly, the markets aren't impressed. Zynga's share price collapse continues apace, dropping off almost 40% after these results were announced, and while Mark Pincus may claim that that's not really a primary concern, you can be damned sure that the stock price is one of the first thing he glances at in the mornings.

Zynga has arguably done many things which deserve scorn, but not remotely as many as the firm's detractors claim - and those detractors casually ignore the fact that this is a large company employing and providing job security to a large number of talented developers and other staff. Nobody in their right mind should wish ill on the firm to the extent that some people seem to. Equally, however, this feels like a company sliding downhill without any real idea of where to find the brakes. As investors are constantly told, past success may be no indication of future results. Zynga's ability to replicate the success of its Facebook glory days cannot be assumed. On mobile, it needs to prove itself anew - this time without the benefit of the dirty tricks Pincus proudly admits to having used first time around. This is the ultimate test of both him and his company. Thus far, both are struggling for a passing grade.

48 Comments

Bruce Everiss
Marketing Consultant

1,716 598 0.3
Nice

"allowing faster, more nimble companies to land-grab on mobile - a land-grab encompassing not only users, revenues and reputation, but also the experience required to build successful social products on mobile."

Social mobile products are very difficult indeed. But the app store is increasingly about using horsepower to gain visibility, and Zynga have plenty of that. And they also have an unparalleled grasp of analytics and metrics that allow them to tailor products more closely to the customer's requirements.

"Draw Something has collapsed since being acquired by the company - probably largely because the concept itself didn't have much long-term potential for players (there was a distinct lack of a goal or reward system to keep people engaged),"

So very true, this was a fad, and an obvious one with no real game mechanic. Once people got over the novelty of drawing cocks it was doomed. It really needs a bit of "gamification" . However in the deal Zynga also gained the OMGPOP PC platform that has much potential if done properly.

Zynga still have a huge cash pile in the bank, they have some truly exceptional people, they have a catalogue of successful IP, there are plenty of platforms they have yet to visit and they have a very impressive and expanding customer base. So not all bad.

Posted:A year ago

#1
I see one great solution for Zynga.

Make some nice traditional games that people will play and enjoy. Become more like EA :)

Posted:A year ago

#2

Terence Gage
Freelance writer

1,288 120 0.1
At this stage I would gain a bit of respect for the company if they made some real games for real gamers and released them on Steam/PSN/Live. No more F2P stuff; try some other business models.

Posted:A year ago

#3

Khash Firestorm
Senior Programmer

37 36 1.0
What about "freemium does not work" ?

I think what made us beleive freemium is so great was huge amount of new internet users easily accesed and "convinced" to pay. Altough majority of them learn, they instruct their friends and families and it makes potential players comunity more aware of techniques used to "force" them to pay.
In the end noone likes to be cheated, and that's how you should name most of the techniques used on facebook(and other freemium) games, convincing players to pay as oposite to way chosen in League of Legends, which I beleive is one of very few, true commercial free games offering quality, growing while not forcing players to pay...

Posted:A year ago

#4
Freemium very obviously does work. It's an incredibly powerful and flexible business model which, done properly, can be good for both players and developers.

Zynga just don't seem to have be able to use it very well right now. That's not a reflection of a problem with the freemium idea, it's a reflection of problems with Zynga.

Posted:A year ago

#5

Dan Howdle
Head of Content

272 761 2.8
I'm not sure very many blacksmiths reacted to the advent of the motor car by announcing that the horseshoe environment was "challenging", but their more colourful language would have meant exactly the same thing.
Absolutely brilliant article. Particularly the above keen analogy.

Posted:A year ago

#6

Bruce Everiss
Marketing Consultant

1,716 598 0.3
@Dan Howdle. If you extend that analogy is the console industry the same as walking barefoot?
Personally I think it is a false analogy because Facebook is still expanding and Zynga own the turf.

@Rob Fahey. Very well said indeed. Very soon all games will be free and the concept of distributing games as cardboard and plastic will be seen as utterly ridiculous. The world has changed, the genie is out of the bottle. Why would anyone continue to pay money up front when there are free alternatives?

Posted:A year ago

#7

Khash Firestorm
Senior Programmer

37 36 1.0
Ok, wrote it wrong. Freemium which is popular is not working, as its pushes players to the wall instead of offering features to loved game. Players attacked by offers to buy gold everywhere in the game, free games which are nothing more than just demo as you cant really play after short period of time without paying or providing more clients to game... that is what burns out players slowly. Instead we as the developers should provide fair gameplay and make players love to buy somehting. To have something extra not to get "delayed payment" for title, or demo of the game.

Posted:A year ago

#8
I am quite happy to pay for a game up front without in game chuggers and in game ads or in game spam. I find it incredibly annoying.

Via the incredible judicious use of in game reviews, opinions and research, as a player I will make choice purchases of games I would potentially play actively and not keep in the backcatalogue for a super rainy day.

Fremium has its place as a alternative method for sure, try before you pay fully but it doesnt mean is the ultimate for everyone or anyone. The thought that a game is actually just a interactive trailer/demo is not as attractive as it seems.

But maybe its when you reach a certain age, and one values time not to be wanting to download the rest of the game, and to just plug and play instead of plug in and pray...

Posted:A year ago

#9

Terence Gage
Freelance writer

1,288 120 0.1
@ Bruce - "Very soon all games will be free"

"All games"?! Hardly. Stop exaggerating in order to suit your agenda.

Different business models can and do coexist; I don't know why you have such difficulty accepting that. The rise of one does not necessarily indicate the demise of another.

Posted:A year ago

#10

Bruce Everiss
Marketing Consultant

1,716 598 0.3
Here an example I have created for you of where freemium is better than paid:

Take a hypothetical Motor Cycle Grand Prix game. Currently this would cost $60 in a box, but with the big problem of when in the season to release it. Too soon and the bikes soon become obsolete and all the other changes are not incorporated, too late and the game is old news. But do it with digital distribution and you can give the game away for free right at the beginning of the season with the pre season testing circuits loaded. Then just before each of the 18 races of the season the relevant circuit can be made available as a download for, say, $2. Also with the download all the changes to the teams and the bikes can be made so that the game is right up to date. It is easy to see how everyone wins with this model. Customers can just download and pay for what they want. The game is always bang up to date. And the publisher can reach all potential customers in the whole world instantly. Also the publisher makes more profit because they don't have to use cardboard and plastic.

Posted:A year ago

#11

Khash Firestorm
Senior Programmer

37 36 1.0
@Bruce
Haha! good one. The only difference is... it doesn't have to be freemium to get updates :D You can easily offer regular updates to boxed game (eg Witcher did it).

You can offer base of the game and dlc for free! (League of legends did it)

Or you can ask to pay for box at the beginning and subscription for everything later (common in mmo's)

I believe freemium would make really great fans for live if they would be able follow idea where free and paid player are equal customers. Paid players gets just "skins", and other visual bonuses. If really needed then only a bit of extra services. Its a win win, because players feel that game is true free, and they stay with it for long time. Paying for loved game became painless and make developers happy in the end as well :)

Posted:A year ago

#12

Maarten Brands
Director

12 17 1.4
If you combine Zynga's figures with Facebook's earnings call yesterday, where it was reported that 84% of FB's revenue comes from straight-up advertising (that leaves 16% for among others monetization of social games) the social gaming environment on the platform overall is looking really grim in terms of actual revenue.

The smart money atm. is on games & games companies targeting gaming enthusiasts willing to pay for their hobby or passion. Shocking, I know.

Posted:A year ago

#13

Dan Howdle
Head of Content

272 761 2.8
@Bruce

I'd rather just have everything up front for forty quid, thanks, with the developer duty-bound to support me as a customer and ensure my purchase stays relevant. I have an allergy to being stealth-milked and believe it or not a vast amount of people feel the same way.

Edited 1 times. Last edit by Dan Howdle on 27th July 2012 11:00am

Posted:A year ago

#14
@Bruce, I hear you though an argument to say why freemium can be cool says nothing about why other models are less cool. The subtle updates you mention are perfectly possible on a premium or subscription PC game and even on console we have DLC to keep titles relevant. That too wil get better - I think we all agree Sony and MS would be insane not to allow easier updates/patches with the next hardware refresh.
You also ignore the cultural aspects of games - consumers are buying the visions of the games creators - they'll go primarily where the interesting shit is happening, not merely where it's easiest to make Credit card transactions. McDonalds burger sales don't make people dislike steaks - in fact just the opposite.

Posted:A year ago

#15

Bruce Everiss
Marketing Consultant

1,716 598 0.3
An amazing thing about FTP is that it makes reviews obsolete. Why take anyone else's opinion when you can see the game for free and make your own mind up?
This will be the ultimate undoing of boxed games, with which every purchase is an act of faith. Everyone reading this has spent hard earned money on a boxed game they didn't like. This doesn't happen with FTP.

With social FTP it is good to have lots of non paying players to provide opponents to those who do pay, you don't want to frighten people off by being grasping. And despite some of the comments above the most popular IAPs are ways of speeding the game up!

Also FTP encompasses a wide range of different monetisation mechanisms, some of which are still being invented! 22 Cans and their $50,000 purchase being such a novel idea.

Posted:A year ago

#16

Terence Gage
Freelance writer

1,288 120 0.1
I have a code for the Dust 514 beta this weekend. It is a game I'm very interested in, and for the sake of impartiality Bruce I will give it at least a serious couple of hours, compare it to other online console FPSs I'm familiar with (such as Killzone 3, MAG, BF1943, Call of Duty: W@W) and let you know whether I think F2P is the future in all genres on all platforms, as you seem to. Bearing in mind it's still a beta, of course.

Posted:A year ago

#17

Jim Webb
Executive Editor/Community Director

2,210 2,051 0.9
Something wrong with demo's, Bruce?

Trucks, cars, SUV's, motorcycles, public transportation, bicycles.....kinda funny how we have all these different means of transportation and they can all coexist, huh?

Posted:A year ago

#18

Khash Firestorm
Senior Programmer

37 36 1.0
@Bruce
"FTP is that it makes reviews obsolete" Huh... I think you are going to far with this guess. I like reviews when considering if game sounds interesting or if other users gets same impression as I did AFTER I played. Reviews are not just an advertisement to pay for game. Sometimes they were negative, because reviewer don't like what I was looking for in game for some time and it sill made me buy it. I prefer to read few reviews than waste time on tons of useless free games where finding good one without enforced payments every step is a hard joke.

Also I feel you are going after this "bad" freemium idea.
"have lots of non paying players to provide opponents to those who do pay"
Hey! don't make them just "bots" which you can't program yourself, make them valuable users which in turn will wider translates to paid users when they enjoy game, not just being training instruments for paid users

Posted:A year ago

#19

Dan Howdle
Head of Content

272 761 2.8
@Bruce

Because people don't have time to just 'try everything out' whether it's free or not. Look at eBooks. The ease with which you can publish one has led to a sesspool of literary slurry, much the same way as worthwhile apps constitute only a fraction of a percent of the whole. You seem to be suggesting both that people have the time to try every one of the fifty results from their search for a 'Good F2P MMO', one after the next, and that the function of a review is merely to play something and throw a number at it. It's not.

Reviewers slap on their waders and trudge through shit their audiences don't have to. They are where you turn to find out if something is worth trying in the first place, irrespective of what it costs.

Edited 1 times. Last edit by Dan Howdle on 27th July 2012 12:17pm

Posted:A year ago

#20

Bruce Everiss
Marketing Consultant

1,716 598 0.3
@Jim Webb

But I don't see many people commuting by horse.

Zynga have a DAU of 72 million and an MAU of 306 million.
That last figure is about the same as all the PS3s AND all the Xbox 360s AND all the Nintendo WIIs AND all the PSPs ever made. Zynga are the giant of providing the video game entertainment that people want.

Posted:A year ago

#21

Antony Carter
Senior Programmer

84 47 0.6
@Bruce

Isnt that one of the points in the article tho, 306Million Monthly active users all costing you something and only a tiny percentage of them paying you something is not really something to boast about.

ALL Nintendo, XBox and PlayStation Customers are Paying customers, without exception.

Posted:A year ago

#22

Khash Firestorm
Senior Programmer

37 36 1.0
@Bruce
I'm not that much in numbers... but I could try guess that zynga have as well losses which would be hard to find elsewhere. Its not that "free" is bad, I would say, its harder to annoy player if he hadn't pay for game which turns out to be bad, and easier to grow rapidly if users start loving it. Its just about not forgetting that players are not meat, they are not brainless "click" 'ers or a buffer of contacts to advertise title. Players learn to avoid, they learn to hate games which try to "itemize" them. And its only because "learning" takes time many companies grow on freemium ignoring that they have to provide entertainment as well not only opportunity to pay...
EDIT: Above is not about all free games, but those which follows this schema

I dont care if I have to pay 20-40 to get good game, I don't care if I pay upfront, over time or in-game shop. But what I care is to get more than just illusion of game on top of empty box. If game offers a lot of fun I'm buying almost all DLC and invite friends, if game is boring and sucks I'm warning my friends to not waste time on it...
Freemium or not... game have to be game first

Edited 1 times. Last edit by Khash Firestorm on 27th July 2012 1:58pm

Posted:A year ago

#23

Dave Herod
Senior Programmer

517 731 1.4
@Dan - Precisely. Like when I used to download community maps from Unreal Tournament, all of which were free, but there were plenty of review sites telling you which ones were even worth bothering to download.

Also, Bruce, why do you consider making reviews obsolete a "good thing"? Have you got something against journalists and game reviewers that you'd like to see them out of a job?

Posted:A year ago

#24

Peter Dwyer
Games Designer/Developer

458 254 0.6
@Dave

Given how dishonest most game reviews are these days I'm suprised you DON'T have anything against the journalists involved. Recent examples I always flag are the 10/10 Skyrim reviews, GTA IV reviews, Mass Effect 3 reviews. The list goes on.

Most people I now talk to go by word of mouth rather than trust anything a magazine or mainline games websites reviewers say.

Edited 1 times. Last edit by Peter Dwyer on 27th July 2012 2:05pm

Posted:A year ago

#25

Terence Gage
Freelance writer

1,288 120 0.1
Although I don't put too much credence in reviews any more (besides Gamecentral, who I find refreshingly harsh), they are a good barometer of a game's general content and quality. I wouldn't want them to go away entirely.

However, I'd gladly see some publications drop the score at the end. Too often the focus is on that sole number and not the hundreds of words preceding it.

Posted:A year ago

#26
I tend to find the reviews give one a generalist flavour of the game. Youtube trailers then give the visuals and elemetns of gameplay. If its interesting, it gets on the interest list as the game gets closer to release. Otherwise, no money is parted from the wallet. The score given is something one can take with a pinch of salt

So reviewers are really still useful.

Posted:A year ago

#27

Terence Gage
Freelance writer

1,288 120 0.1
I tend to use:

Eurogamer for reviews I often agree with, depending on reviewer (for instance, Dan Whitehead and Simon Parkin have very different tastes to me).
Gamecentral for unbiased and fairly critical reviews.
Classic Game Room HD for an entertaining and lenient video review.
Zero Punctuation for an amusingly critical review (usually best experienced after having played the game in question).

I've been recommended GiantBomb but I can't get on with the site design and I used to read Edge's website before my work PC started disallowing it. I also like BitSocket on YouTube but I would prefer a little more content from them.

Posted:A year ago

#28

Kingman Cheng
Illustrator and Animator

929 150 0.2
I think reviews are great, you take all reviews with a pinch of salt but it's just an opinion. If reviews were ditched I would have gone and bought Duke Nukem Forever.

What I don't like with some reviews though are when you attach number ratings to them. And I also tend to look at user reviews/opinions more than the publisher reviews personally.

Posted:A year ago

#29

Terence Gage
Freelance writer

1,288 120 0.1
Kingman - "And I also tend to look at user reviews/opinions more than the publisher reviews personally."

Yeah, me too. I often spend more time on Eurogamer reading through the comments or relevant forum topic than I do reading the articles or reviews. Anyway, apologies for meandering off course so much.

Posted:A year ago

#30

Jim Webb
Executive Editor/Community Director

2,210 2,051 0.9
Bruce, your 306 million MAU's is only 4.1 million paying players. You really want to hold that up against the 25 million units of hardware and software sold of the past month? And that's doesn't include any digitally distributed products or peripherals. That's sure to push the number closer to 40 million.

Are you really suggesting that there is a problem with an ecosystem that pulls in nearly 40 million paying customers in a month?

Are you really trying to tell me that those 40 million are about to jump ship for FTP?

Coexistence, Bruce. This shouldn't be religious zealotry.

Posted:A year ago

#31

Martin Klima
Executive Producer

25 47 1.9
Very well said indeed. Very soon all games will be free and the concept of distributing games as cardboard and plastic will be seen as utterly ridiculous.
@Bruce: you seem to conflate the digital distribution with freemium. It is possible -- as you are doubtless perfectly aware -- to get upfront payment for a game that is distributed without "cardboard and plastic".

On a broader point of freemium games, I am with Khash: it offends my sense of fair play. In your Moto GP example, if I don't pay, I don't get the better bikes and I am bound to lose, not because I am worse at playing the game but because I spent less money on it.

That being said, it is still much better and fairer model than most of Zynga games, that are basically a web page with a "Press to Win" button and if you want to "Win" more than six time in a row, you have to pay for the privilege.

Posted:A year ago

#32

Jim Webb
Executive Editor/Community Director

2,210 2,051 0.9
P2W = Pay To Win. Not a fun way to play. Tried that, hated it. Monetary investment should not replace skill as the measure of success.

Posted:A year ago

#33

Nick Parker
Consultant

264 124 0.5
How we quickly move off the subject; what about Zynga? Put it in the right size box which would still be the biggest, but don't put it in an oversize box otherwise you'll be disappointed. Once it finds it's optimal size for trading without the world expecting too much and then shooting it down when it doesn't achieve, Zynga should be a nice business. Not a great story for its early investors but after a reboot, there may be some long term returns at that more realistic value.

Posted:A year ago

#34
Here's an idea. How about SEGA buys Zynga's IP??? They could do so much with it.

And no, that's not a serious suggestion - the regular posters should get it;)

Posted:A year ago

#35
Zynga will stand or fall based on the quality of what they release, just like everyone else. Their market size will be as big as their talent, not their wallets. So they have zero chance of monopolizing anything in the 'new era'.

I dare say that the one area this new era of gaming may undermine is marketing. Marketing has always been the overblown, underperforming spoiled brat of games, directly cannibalising budgets that would help companies make a better product. As opposed to merely messaging they have a better product in 100ft letters.

Posted:A year ago

#36

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,024 0.7
@ Nicholas

Those early investors really should have read-up on the first dotcom bubble. Maybe than they wouldn't have inflated Facebook and Zynga up past the point of reality. :)

Posted:A year ago

#37
A solid commentary, but I think you failed to address online gaming - specifically poker. On the earnings call, they stated they will enter this space in the first half of 2013. While still a challenge in the US (Nevada and Delaware are the only states that are past legislation approval - and still nothing @ the federal level), Europe is an active place to play.

Posted:A year ago

#38
"Take a hypothetical Motor Cycle Grand Prix game. Currently this would cost $60 in a box, but with the big problem of when in the season to release it. Too soon and the bikes soon become obsolete and all the other changes are not incorporated, too late and the game is old news. But do it with digital distribution and you can give the game away for free right at the beginning of the season with the pre season testing circuits loaded. Then just before each of the 18 races of the season the relevant circuit can be made available as a download for, say, $2. Also with the download all the changes to the teams and the bikes can be made so that the game is right up to date. It is easy to see how everyone wins with this model. Customers can just download and pay for what they want. The game is always bang up to date. And the publisher can reach all potential customers in the whole world instantly. Also the publisher makes more profit because they don't have to use cardboard and plastic."

Bruce, seriously. How can you have worked in this industry so long, and get it so wrong?

Boxed game, $60. Release it not long after the start of the season. Get X amount of purchases, and continue to provide free updates and paid for DLC. Each person who buys it will pay $60 upfront, meaning the publisher/developer get their money sooner. Remember, $60.

But you want to release it for free, and charge people $2 per map? 18 maps, that's.... $36, payable in installments - and that's assuming players buy ALL the maps?

Your point about updates, others have mentioned that - as an avid FIFA and NHL fan, I know exactly how well their regular roster/squad updates work.

The lack of paper and cardboard, well, that's happening atm too. But with your model there will be much more bandwidth being used and much more demand on the servers over the course of the whole season.

"And the publisher can reach all potential customers in the whole world instantly."

I don't get this. This is potentially an argument for digital distribution, but I don't see how it's an argument for slashing your income on a title by almost 50%. People who want to buy a racing game, or FIFA, or NHL, will do so. And people who don't, won't - that's how sports and franchises work.

I appreciate some of the stuff you say on here, but I'm afraid that post, in my opinion, is far and away your most non-sensical yet.

Posted:A year ago

#39

Bryan Robertson
Gameplay Programmer

86 209 2.4
Whether or not you can prove that free to play is a better business model for some games (as it undoubtedly is for some, look at the relative success of APB Reloaded compared to the original release for an example), that's a very different thing from proving that it's better for all types of games, or that free to play will completely replace other business models for games.

Also, digital distribution does not imply free to play. Minecraft for Xbox 360 is a pretty good example of a product that's digitally distributed, but not free to play, and still very successful.

It's a huge mistake to assume that because something is getting more popular, that it will completely replace everything else.

Posted:A year ago

#40
It's a huge mistake to assume that because something is getting more popular, that it will completely replace everything else.

+1

Posted:A year ago

#41

Nicholas Pantazis
Senior Editor

968 1,162 1.2
Oh come on Bruce. You preach the success of these companies constantly, but you somehow manage to ignore the fact that very few are making money here. And it's not just a Zynga problem. The only people who are cashing in on the mobile and social revolution are platform holders (Amazon, Facebook, Apple and Google). Everyone else is struggling to find purchase. Even the "big developers" like Gameloft make pennies on the dollar compared to the console industry.

Look, Bruce, I know you have a vested interest in that industry, and I understand your desire to defend them, but sometimes things just aren't as big as you think they are. I'm not saying mobile and social will die or are useless, they have plenty of potential for profit. I'm saying they aren't the gaming messiah you CONSTANTLY claim they are in every freaking post on this forum. VERY few companies are making money in these spaces, and the ones that are are making very little. Step back a bit Bruce and look at it realistically. These markets are important, but they aren't the end-all be-all, and their growth and financial power are limited. They're just another segment of the market, not the dominant one.

Edited 2 times. Last edit by Nicholas Pantazis on 27th July 2012 8:49pm

Posted:A year ago

#42
But buttt, its his job to market and spam this stuff to kwalify!

:)

Posted:A year ago

#43

Robin Clarke
Producer

275 600 2.2
"Freemium" is not the same thing as "digitally delivered". There's some deeply confused thinking in this comment thread. And an apparent stubbornly ignorant refusal to RTFA: no, Zynga aren't too big to fail, no the majority of their users can't credibly be classed as "customers". We've been through this.

It's fairly obvious that letting more people pay what they're comfortable with is more flexible* than targeting the already convinced with a one-off fee. I'm not sure how sinking $60 (or $600) into a game that can be switched off at any time is less of a gamble than paying once for a game before seeing if you like it, though.

As for Zynga, I can see them pivoting into just becoming a pure online gambling company very easily.

*albeit not always more lucrative - ask Activision or Nintendo.

Posted:A year ago

#44

Murray Lorden
Game Designer & Developer

199 71 0.4
Zynga were genius at introducing a massive audience of gaming virgins to games. But after a few unsatisfying quickies behind the gym change rooms, they've become gaming cynics, something that happened to all us hardened gamers when we first played games. You quickly learned that games are cool, but that there's heaps of crap games, too. Heaps of "me too" games.

Time has accelerated now, and these new gaming enthusiasts (youngsters, mums, grand-dads) have quickly been burned by bad game design in just a few short years. It's all good. Now they want better games now. They're finally gamers! All those who missed the boat in the 70's, 80's, 90's, have finally been given a complementary Facebook express ticket to the exhilarating world of gaming. WELCOME!

Now, the audience is larger! They're on Facebook, they're on mobile! These new gamers have been invited by Zynga, only to realise their date is a lousy slouch, but now they're looking for someone else to dance with. That's US! :)

And I believe Zynga can adapt and move on, and even (maybe) make great games.
But not the same games they were making around 2010.

Lessons have been learnt. Let's move on up! And give this massive swathe of new gamers something to dance to! :)

MUZBOZ

Posted:A year ago

#45

Matt Walker
Production Coordinator

41 23 0.6
Poor Bruce. I don't always agree with what you say, but everyone is out to get you on this one. Just wanted to say that although I don't necessarily agree with your opinion, I certainly respect it!

Posted:A year ago

#46

Bruce Everiss
Marketing Consultant

1,716 598 0.3
Certainly Zynga need to fix their corporate communications.

Posted:A year ago

#47

Rick Lopez
Illustrator, Graphic Designer

1,205 817 0.7
For a company who gained most of what it has from stealing or copying ideas, and purchasing smaller companies, talent and IP's instead of creating them I doubt they have what it takes to become an industry leader. Im sorry for being such an a$$hole... but Im glad.

Posted:A year ago

#48

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