Interview

Home-grown success: Why Zynga reckons the best is yet to come

Home-grown success: Why Zynga reckons the best is yet to come

When it comes to measuring success, money is a decent indicator.

For a publicly-owned company like Zynga, which is floated on the US Nasdaq stock exchange, perhaps it’s even the best measurement.

Certainly that’s what most Zynga shareholders think.

(Disclosure: I am one such, albeit a tiny one.)

Yet financial success is really just the end result of any company working out what its goals are, what value it can provide to its customers, and then implementing the plan.

In that context, it’s significant when Zynga C-level executives do their regular round of interviews following the company’s quarterly figures, they have a lot more to talk about than just the numbers, exciting as they are.

Indeed, when asked about how Zynga has changed during the time he’s been working at the company - there was a big management shake up when Frank Gibeau became CEO in early 2016 - COO Matt Bromberg comments ‘our people love to come to work’.

For the longest time, that wasn’t the case at Zynga, which endured years of declining Facebook sales and quarterly losses, combined with an alarming lack of operational rigor.

“Winning is a byproduct of teamwork,” Bromberg explains.

Winning is a byproduct of teamwork.
Matt Bromberg

“We now have clarity of purpose and much better processes in place.”

The magic number

When Zynga breaks down its operations it does so into three main areas.

First up are the company’s existing games, such as Zynga Poker and Words With Friends, which despite each being a decade old (and more), continue to be renewed.

Zynga Poker recently teamed up with the World Poker Tour, enabling it to hook in-game events into real world championships and players.

Meanwhile Words With Friends was rebooted with a new app in late 2018, which enabled stronger IAP monetisation. Previously, the game was highly dependent on ad revenues.

It’s also receiving a new US marketing push with US celebrity player Alec Baldwin starring in a new ad.

Famously Baldwin was kicked off a plane back in 2011 for refusing to switch off his phone, such was his passion for Words With Friends.

The second pillar of Zynga’s ongoing success has been its M&A activity.

Since 2016, Zynga has spent well over $1 billion acquiring the likes of Finnish developer Small Giants, and Turkish companies Gram Games and Peak Games (parts of).

This means games such as Empires & Puzzles and Merge Dragons are now part of Zynga’s financial numbers. As each of these games generates over $100 million a year, such deals have played a big part of Zynga’s recent performance on the stock market.

Indeed, these companies are performing so well Zynga’s profits have been hit due to the additional earn-out payments it’s having to make as part of its acquisitions.

Broomberg says that’s a great problem to have.

We look really hard for a cultural fit with the companies we’re considering buying and that’s paying off for us.
Matt Bromberg

“We have a unique approach to M&A,” he explains.

“We look really hard for a cultural fit with the companies we’re considering buying: a true spirit of partnership, and that’s paying off for us.”

And with $1.4 billion still available for future acquisitions, it’s a strategy that will continue to generate headlines in the coming months.

No wonder Zynga’s shares are up 180 per cent since Gibeau become CEO.

Bringing it all back home

But as the turnaround approaches its third year, things are going to get serious, as Zynga starts to release the internally-developed games it’s been working for.

The first is the just-launched Game of Thrones Slots.

Oft forgotten, but until its acquisition spree, the majority of Zynga’s revenues came from social casino games.

Indeed, when Gibeau took over as CEO, some commentators - including this one - argued the company should be split into casino and non-casino parts to maximise shareholder value.

Game of Thrones Slots is Zynga first big new slots games for a couple of years; also the first game to use one of the big external IPs it’s licensed. The others include Harry Potter and Star Wars.

“We’ve been pleased with the launch,” says Bromberg. “Social casino is a difficult market, but we’ve made the experience more social so people can play together.”

More, however, is riding on the success of Zynga’s other self-developed games. The Harry Potter match-3 game and the Star Wars action game from NaturalMotion are still too early to be discussed.

Zynga’s reboot of FarmVille is already in soft launch however.

“Yes, it’s a high profile game,” Bromberg says.

“We’re reimagining it for mobile, with more role-playing and breeding elements.”

Indeed, the working title for the game is FarmVille 3 - Animals: the animals provide the breeding and the farmhands you can hire provide the role-playing elements.

Bromberg is well aware of the challenge that faces FarmVille 3, though. After all, the original game launched in 2009, proving to be a smash hit on Facebook, when the social network itself was exploding.

“The world is certainly different from when the original launched,” he admits.

We’ve transformed from a US company into a global one.
Matt Bromberg

“A memory of that magic has to be recaptured but the game will get the time it needs.”

All the world's a stage

But continuing that theme, the world is also very different from when Zynga itself launched in 2007 and floated in late 2011.

For one thing, thanks to its M&A activity, the company is going to continue to drive its annual and quarterly sales, while profitability is also on an upwards tick.

Structurally, what’s also significant is this once North American-centric company now generates a third (and growing) of its sales elsewhere. For that reason, it’s also much more balanced in terms of revenue from iOS and Android users.

Bromberg says “We’ve transformed from a US company into a global one.”

And in 2020, we'll finally see just how deep that transformation goes.

Certainly if Zynga can turn some of its internally-developed games into the world beaters it’s acquired, then the best is yet to come, for staff, shareholders and players. 


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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Delores Smith
Great news about expansion of the game but when are you going to stop u going to to stop using that launcher it doesn't work for everybody computer it must be make for the other countries not with my computer my game is still the same it has not changed at all tu and good luck with the expansion of all the games
jon jordan
Not sure what the launcher is. Sounds like a legacy software (or from hackers?). 96% of Zynga's sales are now mobile so you should only play their games on mobile or through Facebook.