Why Mattrick was right to join Zynga

What's in it for Mattrick, and what does it mean for Zynga?

Don Mattrick's jump from Xbox chief to Zynga CEO left many observers stunned this week. Why would he make this move? And what exactly does this mean for Zynga's future?

Let's try to look at the world from Don Mattrick's perspective. He's been a successful game company executive for decades, first with Electronic Arts where he was president of Worldwide Studios, driving such titles as Need for Speed, FIFA, and The Sims to success. Then he went to Microsoft, where he oversaw the growth of the Xbox from 10 million to 80 million sold. He's just a few months away from launching the next generation in consoles, the Xbox One. Why would he leave?

Rumors have been swirling for months that Microsoft CEO Steve Ballmer is planning a sweeping reorganization of Microsoft. Moreover, it's a reorganization that will significantly change the roles of top executives - and some of them wouldn't have a place in the new organization chart. Mattrick may well have decided (or was informed) that his place in the new structure wasn't what he wanted.

Even with a good role, there's not much upside for a talented executive at Microsoft. Ballmer doesn't look like he's leaving any time soon, so if your ambition is to be a CEO you might have a long wait. The compensation picture is also not great for an ambitious executive. Stock options are the usual way to provide the possibility of a tremendous payday, and that's what Microsoft used in its early decades to grab top talent. That hasn't worked for Microsoft for years - the stock has been steady for a long time and shows no sign of rising. Whether the new Xbox One sells well or not, it's not likely to move Microsoft's stock very much. A significant upside at Microsoft for Mattrick, either financial or professional, doesn't seem likely.

"Mattrick's departure from Microsoft has nothing to do with the recent policy changes regarding the Xbox One"

There's one aspect of this move that needs to be made clear: Mattrick's departure from Microsoft has nothing to do with the recent policy changes regarding the Xbox One. A CEO move for a company of this size takes months to arrange and negotiate; this has been in the works for quite some time. Even if a handshake was arrived at quickly, finalizing a contract on this level takes weeks. The timing of the two events is coincidence.

In any case, some time ago Zynga (perhaps in the form of board member Bing Gordon, who knows Mattrick well) approached Mattrick with an opportunity: become CEO and turn Zynga around. Zynga's stock clearly has plenty of upside potential; it was at less than $3 last week, but it was nudging $15 a little more than a year ago. The company has solid opportunities in front of it with mobile, real-money gaming, and advertising to its immense audience. Zynga's got lots of talented people, a solid technical infrastructure, a huge audience of monthly players, and some proven brands. The problem seems to be getting all of these pieces working smoothly and getting hit products out the door, which suggests a need for a manager with proven experience in doing just that with world-class game brands - a manager like Don Mattrick.

A new CEO who believes in his ability to turn things around at Zynga could make some serious bank from the options on millions of shares of stock. Sources at Zynga indicate that Mattrick's compensation largely consists of stock (either grants or options, or some of both); his potential upside could be in nine figures. It's a big challenge, a chance to make a significant difference to a huge audience, and if you succeed you are richly rewarded. Bingo! Mattrick becomes CEO at Zynga.

"Mattrick's arrival at Zynga has already had a positive impact on the stock, adding over $300 million in value since the announcement"

In fact, Mattrick's arrival at Zynga has already had a positive impact on the stock, adding over $300 million in value since the announcement. There's also an immediate positive impact on PR for the company, as the move is widely seen as a positive endorsement of Zynga's prospects. Employee morale is probably up right now along with the stock price. Over the next few months, Mattrick will have much to do in order to get Zynga on track. That may involve reorganization, or more layoffs, or other changes large and small.

Mattrick will have plenty to prove in his new role. His experience has been with ever larger projects, teams and budgets for PC and console games. Yet the biggest market opportunity for Zynga is in mobile games, where companies like Supercell and GungHo Entertainment are making hundreds of millions of dollars with teams in the dozens. Is it a better strategy to create fewer titles and expect them all to be hits? Or to produce multiple titles quickly and cheaply, with the idea that titles that succeed get extra effort (as King does with titles like Candy Crush Saga)? Will Mattrick change Zynga's overall strategy of emphasis on mobile games and real-money gaming? Will there be a greater or lesser emphasis on advertising, on distribution of other game publishers' titles, on social games, on

The big question for investors and shareholders, no matter what strategic choices Mattrick makes, is: How soon do we see a steady increase in Zynga's share price, and how high is up? There's no doubt investors are hoping Mattrick feels the need for speed in making improvements.

Beyond the implications for Zynga are the effect this move will have on Microsoft, and what this means for the impending Xbox One launch. Read that analysis on the [a]list daily.

Latest comments (11)

They've got to stop using this big super smiley close up of Don. Its still has scary connotations post E3 :)
7Sign inorRegisterto rate and reply
I have seen this on another forum so I apologies for not remembering the writers name:
"No big corporation drops a President before a big launch - but they do speed up departure plans if it offers a chance to salvage a situation and offer a new start!"
As been said by others, Mr. Mattrick had gone as far as he could within MS, six-years in, having recently started a direct line with Mr. Ballmer, but there was no real position in MS he could be placed into. At the same time internal analysis had driven a board decision for a yet to be disclosed corporate restructuring at Microsoft's Interactive Entertainment (MIE) division that could see a number of high profile departures and that the President of MIE (Mattrick) felt he would leave before that announcement Q2 2014.

At this time, the rumors of a "bust-up" between Ballmer and Mattrick regarding the XB-One-80 shambles has not been proven - but claiming any Rights or Wrongs in his departure has to place his untenable MIE position into consideration.
1Sign inorRegisterto rate and reply
Paul Shirley Programmers 5 years ago
It's hard to believe any planned departure was planned for right now, the E3 fiasco seems certain to have accelerated it. Maybe Ballmer was going to take direct control in the coming reorganisation anyway, maybe not. Either way it looks like Microsoft weren't really prepared for Mattrick leaving early.
0Sign inorRegisterto rate and reply
Show all comments (11)
Varun Tyagi AI Programmer 5 years ago
Yeah this justifies why Don was right and all, but it doesn't change the fact that I still hate him.
0Sign inorRegisterto rate and reply
Anthony Gowland Director, Ant Workshop5 years ago
You hate him? What, did he run over your dog or something?

What a very baffling sentiment to profess on an industry news site.
9Sign inorRegisterto rate and reply
Tim Carter Designer - Writer - Producer 5 years ago
Tell me what the key creators are doing.

The suits get way too much attention in this industry.
2Sign inorRegisterto rate and reply
Steve Peterson Marketing Consultant 5 years ago
The suits often control what key creators get to do, and how much resource they are given to do it. So even if you main interest is in what games are going to come out, the actions of business executives matter to that end.

But yeah, how these changes affect the games coming out of Zynga are the most important part of it. Ultimately, regardless of how well Mattrick manages things, if we don't see some great games coming out that attract a large audience, this will not have been accounted a good move.
0Sign inorRegisterto rate and reply
Jamie Knight International Editor in Chief, Playnation5 years ago
is this the same Don Mattrick that you have ripped to bits solidly for the past four weeks up to and including yesterday's article?

is it that guy?

seems to me that Microsoft are not the only ones capable of hypocritical u-turns
0Sign inorRegisterto rate and reply
Steve Peterson Marketing Consultant 5 years ago
My argument is that it made sense from Mattrick's standpoint to move to Zynga; this is not saying I think his decisions regarding the Xbox One are good or bad. His previous posts at EA and Microsoft have left behind better organizations than when he arrived. How much of that you attribute to Mattrick is a judgment call. Can he do the same for Zynga? Unknown at this point. It will probably be six months before we can really see the impact of this management change.
1Sign inorRegisterto rate and reply
Paul Jace Merchandiser 5 years ago
I'm not sure if Mattrick is right for Zynga and frankly I don't care. What matters to me is rather this fresh start will indeed help Microsoft to turn things around for the better.
1Sign inorRegisterto rate and reply
Rick Lopez Illustrator, Graphic Designer 5 years ago
They filled his pockets with 50million dollars, of course he was right to leave.
0Sign inorRegisterto rate and reply

Sign in to contribute

Need an account? Register now.