|Unless it is the SEC of the DOJ, it is hard for me to get too agitated about the retrospective claims of the ambulance chasers.|
ZYNA is down 10% in after hours trading on the news that Mark Pincus is returning as CEO:
Mark Pincus, Zynga’s Founder, Returns as C.E.O.
By NICK WINGFIELD and MIKE ISAAC
New York Times
APRIL 8, 2015
Mark Pincus at the media and technology conference in Sun Valley, Idaho, in 2013. Credit Andrew Gombert/European Pressphoto Agency
When Mark Pincus hired a new executive to run Zynga, the online games company he founded, he tweeted a message calling the executive, Don Mattrick, an “Internet treasure.”
Now, less than two years later, Zynga’s Internet treasure has left the company, and Mr. Pincus has returned as chief executive.
The departure of Mr. Mattrick as chief executive was not altogether surprising to many in the industry, since a long-running turnaround plan that he set in motion at Zynga had yet to take flight. The return of Mr. Pincus to the top job, though, was unexpected since he had seemed to have largely disengaged from the business of running Zynga, best known for early Facebook games like Zynga Poker and FarmVille.
The abrupt change in leadership was another setback for a company that was once poised to be a leader in a new era of games and the Internet. Other Internet darlings of the same era, such as Groupon, have also faded after their growth fizzled and profits proved elusive
The changes were effective immediately, the company said. In a statement, Mr. Mattrick said he would return to Canada, where is he from.
“I believe the timing is now right for me to leave as C.E.O. and let Mark lead the company into its next chapter, given his passion for the founding vision and his ability to couple our mobile progress with Zynga’s unique strengths,” Mr. Mattrick said.
In an interview, Mr. Pincus said that the company did not fire Mr. Mattrick, but that the two agreed it was time for Mr. Pincus to return to the chief executive job.
“Don and I share a deep commitment to this company achieving its potential,” Mr. Pincus said, and added that he would continue to receive guidance and coaching from Mr. Mattrick.
Founded in 2007, Zynga, based in San Francisco, was among the first companies to bring free-to-play games to a mass audience in the United States. That approach to the business, pioneered by companies in Asia, opened games up to huge new online audiences, a small portion of whom spent money on virtual currency and other goods that enhanced their game experiences.
For a time, Zynga’s growth sent tremors throughout the games business, as it siphoned talent from established companies like Electronic Arts.
Quickly though, Zynga found itself disrupted by technology changes. It initially found success by publishing its games on Facebook, as the social network was taking off. But with the advent of the iPhone in 2007 and other smartphones, momentum in the business quickly shifted to mobile games.
While Facebook, too, struggled at first with the rise of mobile, it eventually adapted to the changes and now has thriving business from smartphones. Zynga has not made the leap as effectively.
Word of Mr. Pincus’s return was puzzling to some and suggested that the transition was sudden. Mr. Pincus has not been a visible presence in Zynga’s offices over the past year, though he occasionally emailed staff with his thoughts about Zynga games, according to one Zynga employee, who asked for anonymity because the company’s internal communications are confidential.
While he had left daily operations, Mr. Pincus still wielded tremendous influence over the company through a share structure that gave him 63 percent of the voting power of its outstanding capital stock, as of the end of last year.
Mr. Mattrick, a longtime Electronic Arts executive who later ran Microsoft’s Xbox business, reoriented the company toward mobile and reduced its reliance on Facebook. Still, 51 percent of the company’s revenue last year came from Facebook games, according to company filings.
Games are a hit-driven business, and Zynga titles in recent years were never able to capture the cachet of games from mobile-centered companies, like Candy Crush Saga from King.com and Clash of Clans by Supercell.
The company’s finances continued to worsen under Mr. Mattrick. Revenue last year was $690 million, down from $1.28 billion in 2012, the year before Mr. Mattrick took over. The company’s net loss rose to $226 million last year from $209 million in 2012.
As growth slowed at Zynga, and the tech job market around it in San Francisco boomed, the company has struggled to hold onto talent. At the end of last year, about 42 percent of the company had been with Zynga for less than a year and 55 percent for less than two years. “We have experienced significant turnover in our head count over the last year, which has placed and will continue to place significant demands on our management and our operational, financial and technological infrastructure,” the company said in a filing.
Last year, the company botched the introduction of a new Zynga Poker game for mobile. Use and revenue declined from the previous game, which Zynga was then forced to bring back.
Investors have lost interest in the company. Its stock is almost unchanged since the day before Mr. Mattrick joined.
In February, Richard Greenfield, a media and Internet analyst at BTIG Research, published a report highly critical of Mr. Mattrick’s leadership, titled “Zynga Needs a New Leader — Time for Don Mattrick to Go.”
With Mr. Pincus’s return, the company is likely to reinstate his data-driven approach to creating games, focusing on metrics about how and why people are playing Zynga’s games, and using that information to tweak production.
That is in sharp contrast to the approach of Mr. Mattrick, who has typically been less focused on analytics and has championed game quality over all.
“We need to get back to being the leader in mobile data and analytics, which leads to the best product management in our games,” Mr. Pincus said. “I think I bring a DNA and passion, in that respect.”