Interview

New games, new tech and more M&A: Frank Gibeau on making the right bets for Zynga’s future

New games, new tech and more M&A: Frank Gibeau on making the right bets for Zynga’s future

The problem with consistency is although it takes a lot of work to maintain, to outsiders it gets boring very quickly.

In that context, the news Zynga’s FY17 Q4 saw revenue growth and profitability for the third consecutive quarter could already be labelled as ‘more of the same’.

The scale of the company’s transition can be better gauged by its performance across the entire financial year, however.

During FY17, overall sales were up 16 per cent to $861 million, while Zynga recorded a full year profit of $27 million compared to a loss of $103 million for FY16.

In terms of key games, Zynga Poker’s booking were up 38 per cent year-on-year, CSR Racing 2 up 27 per cent, and thanks to the launch of Words With Friends 2, the Words With Friends franchise delivered the best mobile revenues in its eight year history.

No wonder CEO Frank Gibeau was happy to enjoy what he labelled “a bit of a victory lap” when announcing the financials.

Of course, he was also quick to remind everyone that Zynga remains in the second year of a long-term turnaround process. “We’ve started focusing hard on FY18 already,” he commented.

What’s next?

And looking ahead to the next 12 months, the boring consistency of focusing on live operations for its existing titles will remain the name of game for Zynga.

It’s now expected the likes of Zynga Poker and CSR 2 will continue their upwards trajectory, while the addition of the card and board game titles bought from Peak Games at the cost of $100 million will also kick in. Further into the year, the just-announced multi-year deal with World Tour Poker will add new features and content to further boost Zynga Poker.

CSR Racing 2 is one of the engines of Zynga's growth

This will provide a strong foundation. But when it comes to taking Zynga to the next level - from turnaround and into strong growth - Gibeau is more thoughtful.

That’s partly because Zynga has been working on a number of new - and as-yet still unannounced - games, some of which will be released in the second half of 2018.

We’re not banking our future on a breakout hit.
Frank Gibeau

These are expected to include the debut from the company’s Helsinki studio, as well as new strategy titles from Naturalmotion. Also in the mix are the reinvention of old Zynga titles, notably from the Ville series of games that were so popular in the early days of Facebook gaming, and licensed IP products.

Yet, as demonstrated by the failure of 2017’s Mafia Wars to make it out of soft launch, the only thing that should be expected when you’re developing a mobile game is disappointment.

“We’re not banking our future on a breakout hit,” Gibeau tells analysts. “But if we get one, we’ll say thank you very much.”

Future bets

And that’s why he remains very enthusiastic about the potential for emerging technologies ranging from AR and 5G networks, to chat and messenger games.

For example, he says the version of Words With Friends released on Facebook’s Instant Games platform has generated strong engagement among a young male audience that isn’t well represented among app-based Words With Friends players.

He was happy with the reaction to CSR 2’s AR mode too. “It drove higher engagement and we saw a lot of social posts. I think it was a big win for fans," he says.

Of course, neither of these two initiatives has generated revenue yet but Gibeau doesn’t mind.

CSR Racing 2's AR mode is part of the company's long term bet on the technology

“I’m taking a longer view,” he says. “Mobile games have more growth potential than any other form of gaming.

Mobile games have more growth potential than any other form of gaming.
Frank Gibeau

“That’s why we’re investing aggressively in chat games because I think they will be big in the West. We’re already seeing good audience growth and we’ll be there when monetisation is turned on.”

Buying growth

Similarly, following on from the $150 million spent in 2017 buying Harpan’s Solitaire game and Peak Games’ card portfolio, Gibeau also expects Zynga to take advantage of M&A opportunities over the coming months.

He’s particularly interested in teams, companies and games that will help Zynga expand beyond its current iOS and North America-centric business. In that context, he also expects to release more games developed by Zynga’s Indian studio specifically for the local market.

And that all adds up to a lot of opportunities in the coming months. Maybe 2018 won’t be quite so boring for Zynga watchers, after all.

Disclosure: The author has shares in Zynga.

Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.

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