Zynga's struggles have been well documented. The once mighty social publisher is struggling to get its stock back up while executives continue to walk out the door and its user engagement continues to plummet. Some believe that Zynga can certainly be saved, but perhaps it's going to happen out of the public spotlight. Interestingly, Zynga boss Mark Pincus recently retweeted an analysis by Softech VC Charles Hudson about how the company could benefit from going back to being a private firm.
There are numerous pundits who've said Zynga was far too early and ambitious in filing for its IPO, and now the company is under immense pressure.
"There are really interesting opportunities available to Zynga - they're just too risky to do as a public company. There is a lot of greenfield opportunity in front of Zynga. Social casino, both for-fun and real money, are both still markets that can be contested with good products and smart marketing spend. There are interesting opportunities in midcore and hardcore mobile games. And very few companies have really cracked social distribution. All of the segments I've mentioned above are speculative - they haven't settled out yet and there's still a lot of work to do to figure out what it takes to win. Winning in these market spaces will take experimentation, testing, and will inevitably involve some failure. That sounds more like work to do in private than in public," said Hudson.
"Fundamental distribution and platform transitions are hard enough to do - doing them in the glare of being a public company is downright impossible"
Hudson agrees with most that Zynga's future lies in mobile, but making the transition from a Facebook reliant company to one that can leverage mobile and other platforms isn't so easy, especially with the public demanding results.
"Zynga is in the midst of managing a really difficult platform transition - this is really hard to do as a public company regardless of what industry you're in," Hudson continued. "This is not just a games issue. Look at all of the traditional commerce companies that have tried to compete with e-commerce. And all of the print and analog media companies in music and news that have struggled to cope with the transition to digital. One thing is clear to me - fundamental distribution and platform transitions are hard enough to do - doing them in the glare of being a public company is downright impossible."
"The reason is simple - public companies are measured quarterly and these kinds of transitions require quarters of hard work to effect. Zynga, and just about every knowledgeable analyst that covers the company, understands that the future is in mobile. Making that transition from a Facebook-centric world to one where they have a meaningful contribution on mobile will take time and that's hard to do in public."
One of the tricks for Zynga will be to build up a network on mobile that simulates the sort of opportunities the company enjoyed on Facebook.
"There's no reason to believe that Zynga can't build up a strong, meaningful cross-promotion network that rivals what they have on Facebook. Independent companies like Chartboost, Playhaven, and Papaya (AppFlood) have proven that the model can work across developers. And Zynga has some good assets in mobile when you look at Draw Something, Words with Friends, all of the X-With-Friends games, and upcoming IP. The real secret, though, to making this work is that Zynga needs a sufficiently diverse portfolio of offerings in its quiver to have the right game to suggest to the right user at any given point in time. Right now, they are heavily weighted toward casual. I expect they will add more hardcore, midcore, and casino games so that they eventually have something for everyone," Hudson noted.
"On Facebook, Zynga competed with Playfish, Playdom, Wooga and others to build the strongest cross-promo network. They eventually won. Now they're competing with a new set of formidable competitors in GREE and DeNA. Unfortunately for Zynga, they are competing with those companies on their home platforms (mobile) - but Zynga will compete and I think we're still in the early days of seeing how this all plays out."
[Thanks to Business Insider]