Zynga's business has clearly seen better days, as the company recently saw its stock drop to record lows after a disappointing earnings report, and executive talent seems to be hemorrhaging from the company. To analyst Michael Pachter, the solution would be for Zynga to give less of their games out for free.
"I think that Zynga's biggest problem is they started out as a free-to-play company, and so as they grow users they don't necessarily grow revenues," detailed Pachter. "They have to figure out how to monetize every user. The simple way to do that is advertise. Make this commercial supported gaming. If you don't spend money you have to sit through ads and if you spend money you don't. So the Words with Friends model, where you can pay three bucks and opt out of ads, I think that's fine."
"If you got four dollars a year out of each of their 311 million actives, that's more revenue than they're making now. That alone I think would solve their problems"
He continued, "I have to say, I actually think the right model for them would be if you pay a dollar, and the dollar goes as a credit in the game so you can spend it on in-game items if you want to, but if you deposit a dollar each quarter, no ads for three months. If you got four dollars a year out of each of their 311 million actives, that's more revenue than they're making now."
Pachter is also on record as being pessimistic about Nintendo's Wii U. Roughly a month from the system's launch, he's not changing his tune.
"I'm not a fan of the console. Essentially I look at the GamePad and the television, the two screens, and I see a DS that's disaggregated."
"When the hardcore fans are satisfied, I think sales are going to drop precipitously because I don't think the thing is priced competitively with what most people think is a comparable console, Xbox 360 or PS3"
Michael Pachter on Wii U
"I'm afraid we're going to have a repeat of the Wii cycle from the publishers' perspective and the developers' perspective, where very few people will support it. Then if it's successful they'll come in, and they'll fail. When they fail, they'll go away again," he added. "It will sell out until the hardcore Nintendo fan base has all their consoles, and I don't know what that number is. They sold 90 million Wiis; it's certainly less than 90 million hardcore fans. I would guess it's between seven and ten million, and it could be 20 million but they don't all have $350. When the hardcore fans are satisfied, I think sales are going to drop precipitously because I don't think the thing is priced competitively with what most people think is a comparable console, Xbox 360 or PS3."
Read the full interview with Pachter on [a]list.