|From: Glenn Petersen||2/10/2019 10:04:05 PM|
|Zynga’s turnaround: How once-beleaguered game company plans for 2019 growth|
Dean Takahashi [url=https://twitter.com/deantak]@deantak [/url]
February 9, 2019 7:15 AM
Above: Social-gaming publisher Zynga's headquarters.
Image Credit: Zynga
Zynga went public in 2011, and it grew quickly on the strength of social games like FarmVille. But it hit the skids in 2013, and it began going downhill. Frank Gibeau, a former Electronic Arts executive, joined as CEO in 2016, taking over from Mark Pincus, the original CEO, who replaced his own replacement, Don Mattrick, who was Gibeau’s former colleague from EA. (Did you follow all that?)
It was a long slog, but Zynga has gone through a turnaround. In fact, Gibeau said this week in an interview with GamesBeat that the company’s “turnaround is now complete.” The company broke even, even with 1,778 employees, and it is 39 percent bookings growth in 2019.
Part of the solution has been acquisitions. Starting in November 2017, Zynga began making new acquisitions, such as buying Peak Games board and card games for $100 million. In May, Zynga also bought Merge Dragons maker Gram Games for $250 million, and then in December, it got a 80 percent of Small Giant Games, maker of Empires & Puzzles, for $560 million.
But Zynga has doubled down on its “forever franchises” (those that can top $100 million in a year and sustain a business for five years or more) and driven growth on existing games like Words With Friends and CSR Racing 2. Zynga Poker is still kind of limping, but nine new games are in the works.
Gibeau will be a speaker in a fireside chat with Michael Metzger of Drake Star Partners at our GamesBeat Summit 2019, which takes place in Los Angeles on April 23-24. Here’s an edited transcript of our interview.
Above: Frank Gibeau, CEO of Zynga.
Image Credit: Zynga
GamesBeat: It sounds like you guys had a good quarter there.
Frank Gibeau: It was a good quarter and a good year. We beat on the top and the bottom. We even beat our raised guidance for the quarter. We’re set up for a really strong 2019. The business has a lot of momentum. The thing we’re most excited about is how Gram with Merge Dragons and Small Giant with Empire of Puzzles have fit nicely into the portfolio alongside Words With Friends, CSR 2, and Zynga Poker. We have a good lineup of games to create the base for us, and then we have more than nine games being built right now that will come out over the next couple of years, with a bunch coming in soft launch
It’s an exciting time. We’re out of the turnaround. We’re done. There’s more “Spill on aisle three!” cleanup stuff. We’re focused in on growing the business, making games. It’s a lot of fun. Mobile is the place to be right now.
GamesBeat: You always had the declining Facebook desktop business and rising mobile. Has that stabilized, or is that still happening, still slowing down overall growth?
Gibeau: There’s a couple ways to think about it. We’re 93-plus percent mobile now. When we started I think we were in the 60s. Over the last couple of years we’ve accelerated the transition to mobile. That’s part of how we did the cleanup on the turnaround, to start to exit and focus in on where we had the highest growth. That was in mobile.
The good news is that more than 90 percent of the business is in mobile. We still have a headwind from what we call legacy mobile and web. We have to overcome that when we talk about how we’re going to grow the company. It’s going down. It hasn’t reached bottom yet, but it’s as close to the bottom as it’s ever been. When you think about how we performed this year and how we’ll perform next year, we always start out with a $50 to $70 million headwind in revenue decline from those businesses. Then you tack on the growth in our forever franchises and the new games coming in. We’re almost to the end, but it’s still an artifact that we have to deal with.
I think what’s encouraging is if you remove that from our growth performance, we’re growing even faster. We had a great year over year in the quarter, where I think we grew 19 percent on the top end. If you took out the headwind from web we’d be growing in the 20s. It’s encouraging to see.
Above: Empires & Puzzles has more than 10 million downloads.
Image Credit: Small Giant Games
GamesBeat: Are you already more confident about Empires and Puzzles than acquisition time?
Gibeau: Last week it was in the top 10 on Android. Merge Dragons was in the top 20. We see a lot of momentum in those two franchises, especially on Android and international, which as you know has been a key strategy for us. We’re falling more in love with those guys every day.
If you look forward into next year, we’re projecting that we’ll grow the company 39 percent on the top line. We’re going to try and achieve $1.35 billion on the top. We finished this year just a bit below a billion. It’s a 39 percent growth rate in terms of bookings. It should make us one of the fastest growing game companies, if not the fastest growing public game company, next year. That should set us up for growth in 2020 and beyond.
A big part of that is Empires and Puzzles and Merge Dragons, but also you’ll see growth from Words With Friends and CSR 2. Poker is going to be in a good position too. We have a new lineup of games coming. We’ll have a bunch of them in soft launch in the near future, some of them in the next few weeks actually. They’ll include Star Wars and Harry Potter, Game of Thrones, CityVille, FarmVille. We’ll have additional games from Gram and Small Giant.
We’re going to leave 2018 with about a billion dollars of revenue from our top five franchises, our five forever franchises. Those are going to grow, and then you’ll layer in the new games. We’re very fired up about the fact that we’ll be growing in the next couple of years.
Above: Zynga’s CSR2 has added new vehicles from the Geneva Motor Show.
Image Credit: Zynga
GamesBeat: Electronic Arts gave a mixed outlook for mobile. They described it as a difficult business. Command and Conquer didn’t do as well as they’d hoped. You guys seem a lot more optimistic than EA and some others in the space.
Gibeau: As you know, I spent some time there. I ran the EA mobile business for a while, and we did fine. I think the issue for me is that–it’s not the fact that mobile is competitive. It’s the fact that it’s the largest platform, the fastest-growing platform. It reaches the most people and the most devices. It’s an awesome platform to be on. It’s competitive, but it’s pro ball. You have to execute. You have to be able to compete.
We don’t typically blame the competition around here. We try to focus in on what we can do better than anyone else in the world. What is it about our games that connects with players? How do we go out and find those players and get them to connect with our games and stay with them for a long time?
I understand their point of view, but it’s one of those things where — at Zynga we’re a mobile-first company. We’re focused on mobile. We’ve spent the last few years really getting fit to be able to compete and grow the business. If we were worried about the competition I wouldn’t publicly tell you that we’re going to grow the company 39 percent next year. Poker has been around 10 years. Words With Friends has been around eight years. CSR is a five-year-old franchise. Empires and Puzzles and Merge Dragons are going like hotcakes now. They’re growing fast.
Merge Dragons wasn’t that high in the charts when we started working with them. We think the combination of our studios, our publishing platform, and the fact that we’re out here being inquisitive–we’re out looking for franchises and talented game teams that want to join a company like ours. 2018 was a strong year. We leave it with a lot of momentum. It’s not that we aren’t paranoid about the competition. We just don’t blame it.
Above: Zynga’s leaders. Frank Gibeau, CEO, is on far left.
Image Credit: Zynga
GamesBeat: Is Poker still trying to recover right now?
Gibeau: It had a really good first half of 2018. Then, about midsummer, it got some hits from a Facebook platform shift, as well as some challenges inside the game economy. We’ve been working through that. As you know, with live services, it’s a marathon. You’ll have periods of time where it goes rapidly. You might level off a bit, have to make some changes, and then you get back to growth.
That’s the story right now on Poker. It finished 2018 in line with what it did in 2017, which was phenomenal year, so it’s not like it’s off its peak. It’s performing at its peak. It’s just not growing as much as we want it to. From the time I came into the company, we introduced some new things like tournaments, and the product grew about 96 percent in that period. When you grow that fast, sometimes you have to level off a bit and look at things again.
That’s where we’re at right now. We wish it was doing better, but we feel like we have a good handle on it. We need to make some adjustments to some of the tournament structures, the economy. It’ll return to growth in 2019. It remains a forever franchise for us. We hope to be in business with it for another 10 years. But it’s one of those things where, if you look at the Q4 timeframe, it was really a story of Merge Dragons, Words With Friends, and CSR. Poker did well, but it wasn’t growing year over year as much as we wanted.
GamesBeat: As far as forever franchises, can you talk about that again and why some of these might be considered your forever franchises, even if they’re pretty new?
Gibeau: We have a definition for it, which is a game that does over $100 million a year in bookings, and a game we believe can last for five years or more. We have a couple of other definitions in terms of engagement metrics. When you look at Merge Dragons and Empires and Puzzles, they’re well above the $100 million mark and growing. They have a global audience. They’re about a year and a half into their lives, both below two years I think. We believe these games have the potential and the depth to do that same business through the next couple of years.
Above: Zynga Poker Classic
Image Credit: Zynga
When we greenlight new games, like the nine games we’ve been talking about, we look at the potential in each game and ask ourselves, “Can this last for five years or more? Does it reach a global audience? Does it have a potential to do more than $100 million in a year?” Maybe not the first year, because in mobile you have to grow into it, but it’s definitely not a buzzword. We use it as a decision-making point to classify the games and the investments we make at Zynga.
GamesBeat: You’re at 1,700 people. Is that going to change much in the coming year?
Gibeau: A lot of that is international now. Our European organization is really cool. We have two teams in Istanbul, two teams in Helsinki, teams in London and Brighton. We’ve been growing internationally, because mobile has so much talent in terms of developers and franchises everywhere. We’ve been expanding through acquisitions. We’ve actually expanded our team in Bangalore. They handle a lot of new mobile games. We’ve been investing in new games there for India as well.
I think you’ll see us hang around that number. But if we do scale it up, it’ll be probably more related to acquisition activity than organic growth. We feel like we have a good handle on the size of our company and our operating margins. As we look at how we’re going to grow in 2019 and 2020, we don’t see a big headcount lift. We see a lot more efficiency than a scaling-up army of people.
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|From: Glenn Petersen||6/7/2019 10:48:38 AM|
|Zynga Is Now Flush With Cash and Investors Are Watching for More Deals|
By David Marino-Nachison
Updated June 3, 2019 9:59 a.m. ET Order ReprintsPrint Article
Photograph by David Paul Morris/Bloomberg
Mobile gaming company Zynga finally sold its headquarters building last week, raising millions in the process. So now what?
That—instead of “When will they sell it?”—is what investors are asking following Tuesday’s announcement that the San Francisco-based company, known for Farmville and Words With Friends, agreed to sell its building to a Boston investment firm.
The deal, expected to close before August, should net Zynga (ticker: ZNGA) some $600 million in cash this year, the company said. It bought the building for $234 million in 2012, and Barron’s readers were contemplating its potential value not long after the purchase.
Zynga owned nearly 690,000 square feet of space, leasing roughly half. In December, the company said “close to 100%” of the free space was leased out. Tuesday’s deal is a sale-leaseback, which means Zynga won’t be leaving its digs, though $15 million in new annual expenses are expected as a result.
Zynga had $252 million in cash, equivalents and long-term investments on its balance sheet as of the end of March, so the infusion of funds is a hefty one. But because management had previously indicated that a deal was likely, investors weren’t particularly surprised—though the shares did finish the week up nearly 4%.
Next up is the job of putting the money to work. “We look forward to investing the proceeds into future growth,” CEO Frank Gibeau said Tuesday in a statement that didn’t offer much additional detail. (Zynga didn’t reply to a request for comment.)
That could mean acquisitions. Two recent deals offer clues as to what might be in store.
In December, Zynga acquired 80% of the Finnish company Small Giant Games for $560 million, mostly in cash. It said the deal was expected to boost profits thanks largely to Empires & Puzzles, which it termed a “forever franchise.” (Zynga plans to buy the rest over the next three years.)
And in May 2018, it bought European developer Gram Games, known for Merge Dragons, for $250 million in cash plus future considerations based on Gram’s progress toward profitability goals.
Both games, the company believes, have the potential to hook players because they are easy to pick up, but have lots to offer over weeks, months or even longer, giving Zynga more opportunities to push various digital upsells. And both, Zynga believes, bring in users that won’t necessarily have to drop other Zynga games to start playing.
The deals, management has said, took about a year to come off. Zynga thinks its strength as an acquirer is that it can offer efficiencies on things like marketing, testing, and product management, while leaving a developer’s culture relatively untouched.
Zynga’s “reputation as a place where creatives want to go work has vastly improved over the past year,” Stephens analyst Jeff Cohen wrote Thursday.
Wall Street expects revenue to grow from $970 million last year to about $1.78 billion in 2021, with earnings per share rising from 11 cents to 30 cents. Zynga has said that while it wants to be able to make moves it thinks can help it grow, it is also comfortable with what it has.
“We don’t need to acquire anything else to grow,” Gibeau said at a JPMorgan Chase conference in mid-May, saying Zynga has a solid strategy for organic growth over the next couple of years. “But if we do find an opportunity to partner with a company, like we have with Gram or Small Giant, we’d like to be able to do so.”
Zynga’s shares are up 60% this year through Friday’s close at $6.29, not only outpacing the S&P 500 and competitor Glu Mobile (GLUU) but larger, console-heavy developers Activision Blizzard (ATVI), Electronic Arts (EA), and Take-Two Interactive (TTWO). Wall Street’s average price target is just under $7.
“We are not anticipating a major, transformative acquisition, but instead, opportunities similar to its recent spate of purchases,” PiperJaffray analyst Michael Olson wrote on Tuesday. “We view Small Giant/Gram sized acquisitions as the sweet spot for Zynga, which we believe seeks to acquire small studios looking to scale an established title.”
Email David Marino-Nachison at email@example.com. Follow him at @marinonachison and follow Barron’s Next at @barronsnext.
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|From: Glenn Petersen||6/27/2019 11:48:12 AM|
|The power of casual gaming:|
More than 9m play Candy Crush for three hours or more a day
Executive of maker King tells MPs he does not believe there is addiction problem
July 26, 2019
Last year one player spent $2,600 in a day on gold bar currency that can be used to propel gamers faster through Candy Crush Saga. Photograph: Mark Lennihan/AP `
A top executive at the maker of the multi billion dollar Candy Crush Saga game has revealed that more than 9 million players a day spend from between three to six hours or more playing the puzzle game.
Alex Dale, a senior executive at its maker, King, also told a Commons select committee investigating immersive and addictive technologies that last year one player spent $2,600 (£2,050) in a single day on the gold bar currency that can be used to propel players faster through the game.
However, he told MPs he did not believe that there was an addiction problem among Candy Crush Saga players.
“Among 270 million players we have between two and three contacts a month from people concerned about having spent too much money or time on the game,” he said. “It is a very, very small number who spend or play at high levels. When we speak with to them they say they are happy with what they are doing.”
Dale told the committee that of the 270 million players, 3.4% (9.2 million) play for three or more hours a day, while 0.16% (432,000) play for six or more. He said the average player – the core market is women aged 35 and over – plays for 38 minutes a day. Defending the numbers, Dale pointed out that the many players were from demographics that had “plenty of time on their hands”, including older people and those convalescing.
“Excessive time, it is very difficult to know what excessive is,” he said. “We have a fair number of people in their 60s, 70s and 80s playing Candy Crush,” he said. “We do want people to play more. There are going to be people that like to play our games a lot.”
Dale used the example of the player who spent $2,600 in one day as an example of not jumping to conclusions in assuming a person had a problem. He said the player took advantage of a “sale” of bundles of the gold bar currency and used them up over a seven-month period. That person then spent a further $1,060 on gold bars to use over an extended period.
“That sounds, and is, a large amount of money,” Dale said. “There was a sale on at the time so they were making a rational decision. It is down to player choice if that is what they want to do.”
Damian Collins, the Conservative MP who chairs the committee, asked whether Dale felt the games’ maker had an obligation to intervene or suspend an account of a player behaving in an excessive way. Dale said an email used to be sent out to players who spent $250 in a week for the first time but that gamers would respond that they would not play if they could not afford it and felt the communications intrusive.
Collins suggested that King had been passive in dealing with the issue. “What I’m not getting is any sense that you feel you have a responsibility as a company to identify people that are addicted,” the MP said. “You are only happy for them to refer themselves to you if they think they have a problem.”
In light of the World Health Organi zation recognising playing games to excess as an official medical condition, Dale said King would revisit the possibility of proactively reaching out to players.
“We will look at the whole area again but we have done it before and they didn’t like it,” he said. “We have customer support available in 24 languages. Among 270 million players we have between two and three contacts a month from people concerned about having spent too much money or time on the game.”
A colleague of Dale also attending the committee hearing said only one player in the UK in the last 18 months had asked for her/his account to be blocked.
• Representatives of King have said that the testimony given to the select committee relating to how many players spend three hours or more a day on Candy Crush was inaccurate. The 270m active users is a monthly total while the percentages for the proportion of gamers who spend more than three hours and more than six hours playing Candy Crush relate to daily users. King says it does not disclose daily user numbers so it is not possible to determine how many players spend three or more hours playing. The company is contacting the select committee to clarify the comments made by Alex Dale.
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|From: Glenn Petersen||5/6/2020 7:23:32 PM|
|Zynga grows Q1 revenue 52% to $404 million but payouts hurt bottom line|
Dean Takahashi @deantak
May 6, 2020 1:05 PM
Zynga reported record revenue and bookings in the first quarter ended March 31 as more people turned to social mobile games while isolated because of the pandemic. But payouts to acquired companies that are producing these hit games have hurt the bottom line.
While the increase in mobile gameplay due to the pandemic was good for the company in the last two weeks of the quarter, Zynga didn’t have any particular big hits that launched during the quarter.
But in terms of costs, the payouts to Small Giant Games and Gram Games led to a larger than expected loss. The problem is that, because of accounting rules, Zynga can’t recognize the revenue for the acquired companies as quickly as it is required to recognize the expenses.
Revenue was $404 million in Q1, up 52% from a year ago, while bookings were $425 million, up 18%, thanks to good results from Empires & Puzzles, Merge Magic, and Merge Dragons — games that San Francisco-based Zynga acquired in acquisitions. The company reported a GAAP net loss of 11 cents a share, or $103.9 million, compared to a loss of 14 cents a share, or $128.8 million in the first quarter of 2019.
On a GAAP basis, analysts had expected a loss per share of 2 cents on bookings of $407 million. As usual, it’s a bit hard to parse due to the way Zynga has to report its revenues and earnings due to regulatory requirements. Zynga itself had expected $400 million in bookings and a loss of 3 cents.
But CEO Frank Gibeau said in an interview with GamesBeat that the company has to defer a considerable amount of the revenue to future quarters, based on accounting rules for deferred revenue. When a player buys a pack of virtual items they may use in a game, Zynga typically spreads the recognition of that revenue out over 10 months, rather than recording the revenue in the current quarter. Zynga has a balance of about $453 million in deferred revenue, which will help the company’s performance in future quarters.
“It’s a strange time for the world. Games have really stepped to the forefront in being a great way to keep people connected and socializing and playing,” Gibeau said. “This is probably the most meaningful time in terms of what our products do for society. The feedback coming back from our fans has been really positive.”
In after-hours trading, Zynga’s stock is falling 5.7% to $7.53 a share.
One of the things that affects Zynga’s earnings is strong performance from the acquired companies Small Giant Games (maker of Empires & Puzzles) and Gram Games (maker of Merge Dragons), both acquired in 2018. The only trouble is that contingent consideration expenses (performance bonuses) related to those deals raises Zynga’s expenses as it has to pay bonuses to those divisions. It would probably be better for the financial picture if homegrown games like Words With Friends performed better, but that’s not what it is happening at the moment, with the exception of good performance from Game of Thrones: Slots Casino.
“These types of payments are going to be coming through the P&L, and it’s part of the deal structure we put in place,” Gibeau said. “It’s a good news, bad news thing. The good news is the products are absolutely crushing it and are well ahead of the deal models we used to acquire the companies. Contingent consideration [bonuses] goes up. Deferred revenue goes up. And it pushes out a lot of the revenue but you have to record the costs now.”
In addition to the acquired games, Zynga has a half-dozen strong titles that keep performing well every quarter — its “Forever Franchises” such as Zynga Poker and CSR2. Zynga is keeping those games strong through live operations, such as special events or new in-game items.
Some games are weakening, like older mobile titles and chat games. But Zynga has plans for some big launches, with upcoming games FarmVille 3, Harry Potter match-3, and Puzzle Combat. And Gibeau said the company felt good about the launch of Play Apart Together, a campaign that promotes the physical distancing during the pandemic as advocated by the World Health Organization (WHO). More than 55 companies banded together during recent weeks to promote the campaign.
The stock market reaction to Zynga’s results are usually driven by whether it hits revenue or earnings targets. But it’s complicated because Zynga is required to report some revenue later than when it actually receives it (like when a user buys in-game currency but doesn’t use it until much later). This is called deferred revenue. But if you add the changes in deferred revenue and revenue, you get a better picture of the actual quarter’s results in a number dubbed bookings. Zynga’s management uses this number in how it guides expectations.
Zynga’s actual earnings results for the first quarter fell short of expectations, with a loss per share of 11 cents, or $103.9 million, compared to a loss of 14 cents a share, or $128.8 million, a year earlier. Zynga had guided analysts to a net loss of $26 million, adjusted EBITDA of $57 million, and a net loss of $57 million. Adjusted EBITDA came in at $68 million, about $11 million above guidance.
One of the things that was weaker in the quarter was advertising revenue and bookings, which were $59 million, down 9% from a year ago, as the company saw some pullback in advertising in mid-March. Still, this negative was offset by stronger player engagement during the quarter. Gibeau said advertisers for Zynga’s games did not cut back as much as larger brands did on spending elsewhere.
“In general, our ad business is hanging in there,” Gibeau said. “It’s down a little bit, but it is hanging in there.”
Zynga saw a lower net increasing deferred revenue, which helped improve GAAP gross profit margins, which hit 64% in Q1 compared to 54% a year ago. GAAP operating expenses were also lower in the quarter, though Zynga saw some costs rise from marketing and bonuses paid to acquired companies. Zynga had expected to pay a bonus of $25 million in the quarter, but the acquired companies did so well that the bonus was actually $120 million, much higher and resulting in the net loss.
As a public company, Zynga is required to report quarterly results on a U.S. GAAP basis, while analysts and investors use non-GAAP financial metrics to assess a company’s underlying performance. Bookings and adjusted earnings before income tax, depreciation, and amortization (EBITDA), excluding the impact of deferred revenue, are among those metrics that are most highly scrutinized as they reflect the actual operating activity of the company better.
How well Zynga performs on EBITDA versus analyst expectations is another thing that determines whether the stock rises or falls after earnings.
Zynga’s stock price is also affected by how the company predicts it will do in the second quarter and the outlook for the full year. Zynga has raised its full-year guidance to $1.65 billion in revenues, up 25% from 2019, or rosier than previously expected. Overall, Zynga’s cash position is strong at $1.43 billion.
In Q1, the average mobile daily active users (DAUs) were 21 million, and mobile monthly active users were 68 million, down 7% and 5% respectively from a year earlier, respectively. Merge Magic grew its audience, but older mobile titles, Words With Friends, and chat games saw decreases in mobile DAUs, while chat games and older mobile titles saw decreases in mobile MAUs. Bookings per average mobile DAU was up 27% from a year earlier. Sequentially, Q1 mobile DAUs and mobile MAUs increased modestly, led by growth in casual cards and Words With Friends.
Since late March, as more people sheltered-in-place, Zynga has seen higher levels of engagement in games and it expects this to positively affect Q2 mobile DAUs and MAUs. On a sequential basis, Gibeau said he expects the number of users to go up in the second quarter.
CSR2 added a new feature dubbed Elite Customs during the quarter, which lets players customize and upgrade their car collections. And Zynga is working with Universal Brand Development and Digital Platforms to bring Fast & Furious cars to the racing game.
Empires & Puzzles delivered its best revenue and bookings quarter, thanks to the launch of a new battle pass system that rewards players for completing tasks. It also introduced Season 3 with a new land with Norse gods. Merge Dragons and Merge Magic saw a lot of live events updates. The social slots games hit a record quarter in revenues and bookings with strong performance for themed events.
Words With Friends had a strong quarter in installs and reactivations in March, as players dealt with the pandemic. Late in the second quarter, Zynga will introduce Duels, a new social competitive game mode that rewards players for bringing new and lapsed players back into the fold. And Zynga Poker had a boost from a variety of themed events in the quarter as well as a new quick chat feature.
Zynga said it continues to believe in the long-term potential of games despite the uncertainty around the duration of the pandemic. The company plans to grow through live services growth, creating new forever franchises (those that can generate more than $100 million a year for five years), investing in new platforms, and acquisitions.
Zynga’s top franchises include a diverse mix: CSR Racing, Empires & Puzzles, Merge Dragons, Words With Friends, and Zynga Poker. The newer Merge Magic is promising, and the company still operates social slots and casual card games. Since late March, the company has seen strong reactivations from lapsed players as they cope with self-isolation.
“It was a strong quarter for us all the way through,” Gibeau said. “In the last two weeks, we started to see an uptick. It was already a strong quarter for us. A lot of the impact you will see from shelter-in-home and increases in engagement will impact our Q2 numbers.”
Zynga’s teams are working from home, and the company sees no major work disruptions happening. In March, Zynga began testing its Harry Potter: Puzzles and Spells match-3 title, and it is also testing Puzzle Combat and FarmVille 3. Those games are expected to debut in the second half of the year.
Gibeau also said that Zynga’s move to self-publish Empires & Puzzles in Asia is getting positive results. That is generating good international results for Zynga.
“I’m pleased to see us get into a much more balanced configuration there,” Gibeau said.
And Zynga is experimenting with titles like Tiny Royale on Snapchat’s Snap Games platform, as well as Words With Friends and Draw Something on Facebook Instant Games.
For the second quarter ending June 30, Zynga expects revenue of $400 million, up 31% from the same quarter a year ago, while bookings are expected to be $460 million, up 22%. Live services will drive the performance, as existing titles will continue to generate good revenue. The revenue and bookings numbers are well ahead of forecasts, Gibeau said.
“As we moved into, and May has just started, we see the positive impact of increased engagement,” Gibeau said.
The year-ago comparisons will be favorable with the additions of titles such as Merge Magic and Game of Thrones: Slots Casino.
“Those games are on a really good run,” Gibeau said. “In Q2, one of the standouts is Words With Friends.”
This momentum will be offset a bit by declines in older mobile and web titles. User pay will be a bigger driver of growth while advertising will be weaker because of pressure from the pandemic, which is prompting brands to pull back from advertising.
Zynga doesn’t expect to launch new games in the second quarter. It anticipates a loss of $60 million in the second quarter and adjusted EBITDA of $32 million. Excluding the impact of deferred revenue, the EBITDA would be $92 million.
Expectations for the year
For the full year, Zynga raises its full-year 2020 revenues and bookings guidance by $50 million. Revenues are now expected to be $1.65 billion in revenue, up 25% from 2019, and bookings of $1.8 billion, up 15%.
The guidance assumes that live services will drive the vast majority of the overall performance as existing big titles are expected to do well throughout 2020. New games are expected to debut in the second half of the year. While advertising could decline modestly, growth in user spending is expected to more than offset that.
Overall, Zynga expects a net loss of $245 million for the year and adjusted EBITDA of $210 million (up $123 million from 2019 due to stronger operating performance and a lower increase in deferred revenue). About $200 million of that loss will be “contingent consideration expense,” or bonuses that Zynga may have to pay to its acquired companies if they hit their targets. Zynga now owns 86.7% of Small Giant Games, and it will acquired the reminder in the first quarter of the next two years.
The company will spend more money on marketing as it launches new games. While performance is expected to be strong in the first half, it’s not clear how the COVID-19 crisis will change business in the latter part of the year.
Zynga has 1,908 employees, up from 1,883 employees in the previous quarter. The studios in Europe, the Middle East, and Asia grew, with a little decline in Canada and the U.S.
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|To: gypsees who wrote (351)||6/1/2020 8:30:34 AM|
|From: Glenn Petersen|
|Zynga acquires mobile gaming company Peak for $1.8 billion|
Chris O'Brien @obrien
June 1, 2020 5:19 AM
Zynga will purchase Istanbul-based game developer Peak for $1.8 billion marking the largest acquisition in the company’s history.
In a press release, Zynga officials said the deal would be financed by $900 million in cash and $900 million in stock. Zynga had previously bought Peak’s casual card game studio in 2017 for $100 million.
The deal is the latest sign of Zynga’s resurgence. After several shaky years following its 2011 IPO, the company has reversed its fortunes thanks to a combination of inhouse game development and strategic acquisitions.
Peak is best known for mobile games such as Toon Blast and Toy Blast. The press release noted that Peak’s titles have ranked in the top 10 and top 20 highest grossing games for the iPhone for the past two years. With 12 million daily active users, executives project that the deal will increase Zynga’s DAUs more than 60% while also helping the company expand its international reach.
In a message posted on Peak’s website, founder Sidar Sahin said he was immensely proud of his company’s 100 employees and what they have accomplished since the company’s founding.
“Ten years ago we set out on an amazing journey to make our dreams come true,” he wrote. “Touching millions of peoples’ lives with our technology was just one of those dreams. Today we are one of the largest companies in the global mobile gaming industry. Our games are played daily by millions of people in 193 countries.”
Investors seemed to applaud the deal, sending Zynga’s stock up $.65 per share or 7.10% to $9.80 in pre-market trading. That’s also up from $2.86 per share five years ago.
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|From: Glenn Petersen||8/9/2020 10:39:25 AM|
|How ‘hyper-casual’ games are winning the mobile market |
Games makers are scoring hundreds of millions of downloads by churning out cheaply made titles
Tim Bradshaw, Global Technology Correspondent
AUGUST 6 2020
Hyper-casual games are made and released quickly and cheaply, often by teams of just two or three people © FT Montage
The company responsible for more mobile-game downloads last year than any other publisher around the world has no identifiable mascot like Super Mario or Lara Croft. None of its titles has the brand recognition of Candy Crush Saga, Call of Duty or Fortnite. Even the format it pioneered — so-called “hyper casual” gaming — is obscure to most people outside the mobile industry.
Yet according to market researchers App Annie, French start-up Voodoo outpaced far larger rivals including Tencent, Activision Blizzard and Nintendo by app install volumes in 2019. Voodoo says more than 1bn players to date have downloaded more than 3.7bn of its games, which include Helix Jump, Crowd City and Paper.io.
Hyper-casual’s position as one of the games industry’s hottest new trends was confirmed this week by Zynga’s $168m acquisition of Istanbul-based Rollic Games. Zynga chief executive Frank Gibeau called hyper-casual “the fastest-growing category on mobile” — making it the biggest new thing in the most lucrative part of the games business.
The hyper-casual concept is a reaction against the standard formula for creating games. Instead of an expensive and lengthy process of testing, polishing and refining a title, in the hopes that gamers will spend years playing, hyper-casual publishers work by volume, often pushing out a new title every week in the hope that something takes off.
Each app is built cheaply, often by teams of just two or three people, using crude graphics and super-simple gameplay. If a game starts to show promise, the publisher buys up audiences through cheap online ads, then churns them into revenues by showing yet more ads inside the game itself.
Helix Jump produced by French start-up Voodoo Aqua Park also by Voodoo “
They have done to Candy Crush what Candy Crush did to traditional PC games,” said Stephane Kurgan, former chief operating officer at Candy Crush makers King, and now an investor at Index Ventures. Whereas hundreds of people might work on traditional PC and console games such as Call of Duty or Grand Theft Auto, Candy Crush was initially created in six months by just a handful of people.
“The barrier to entry is very low and it’s highly capital-efficient” to push out dozens of hyper-casual games and “see what sticks”, Mr Kurgan said. Hyper-casual publishers such as Voodoo, Rollic and Ubisoft-owned Ketchapp draw on thousands of small development studios all over the world which are constantly pumping out new ideas.
“The cost of building games is dropping and therefore people can put out games really quickly and cheaply,” said Paul Murphy, a partner at venture firm Northzone and the founder of mobile game developer Dots. But he added: “Because you can get something out there for little to no effort, in hyper-casual there is a lot of crap, and a lot of clones, and a lot of clones of crap.”
Another games company founder lamented that the industry’s creativity had been reduced to an “Excel exercise” by the trend.
In Helix Jump, one of Voodoo’s most popular games, players must swipe left and right to spin a wheel, allowing a bouncing ball to fall as far as possible. Each attempt is interspersed with a full-screen ad, often for other games, while two more ads are layered on top of the gameplay. This density of ads, combined with hundreds of millions of downloads a month across the category, is what makes hyper-casual gaming so lucrative.
A typical user’s average play session on a hyper-casual game lasts just two and a half minutes a day, according to a joint report on the market by Adjust and Unity, two providers of tools for app makers, compared to nearly 20 minutes per session per user per day for other kinds of games. That means the average income from each user is also small, at a median of just $0.13, Adjust and Unity found.
However, hyper-casual publishers do not spend extra money targeting particular audiences — after all, who knows to whom games Flappy Dunk, Voodoo’s odd mash-up of Flappy Bird and basketball, might appeal?
“You have to be super appealing to the widest audience possible,” said Andrei Dubinin, who runs the new hyper-casual division of Russian publisher My.Games. “You have to appeal to billions, not millions.”
That means the companies’ distribution costs are also far lower than traditional games, often running automated ads on social media that simply show the app’s gameplay.
“It’s very clever to be able to have that arbitrage,” said Mr Kurgan, “but it only works as long as some platforms are inefficient. At some point the arbitrage shouldn’t fully be there.”
Tangle Master 3D by Rollic Games Baseball Heroes also made by Rollic
That leaves Voodoo, Rollic and their rivals racing to build a network large enough to be self-sustaining, using ads in their own games to drive downloads of new titles. The more games in the network, the more data publishers can gather on what players want, to inform the next wave of apps.
Still, some in the games industry are sceptical that any hyper-casual publisher can build a sustainable business longer term.
“It’s not a business in itself,” said the head of one leading mobile games developer, despite being a significant advertiser within hyper-casual games for his own titles. “New companies pop up all the time, it changes very fast.”
Alexis Bonte, group chief operating officer at Stillfront, a Stockholm-based games publisher, believes there is a “bit of a bubble” in the market. “There are a lot of hyper-casual studios openly on sale right now, trying to cash in,” he said, “which is always a sign.”
Nonetheless, Voodoo is hoping to become the hyper-casual industry’s first unicorn, according to people familiar with the matter. After raising $200m from Goldman Sachs two years ago, the company has been talking with prospective investors about selling another stake at a valuation of about $1.5bn and hopes to close the deal in the coming weeks.
Voodoo declined to comment on the negotiations, which had been previously reported by Bloomberg.
But even if hyper-casual does prove to be a fad, Mr Bonte said there are lessons for the rest of the industry in moving faster and using data to test new titles, accelerating an end to the practice of spending years developing a single game.
\I look at hyper-casual for inspiration,” he said. “I think there is something there.”
Additional reporting by Patrick McGeE
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|From: Glenn Petersen||11/4/2020 5:39:16 PM|
|Zynga shares dip on loss despite record revenue|
Published: Nov. 4, 2020 at 4:10 p.m. ET
By Jon Swartz
Zynga recorded its best average mobile daily-active users (31 million) and monthly-active users (83 million) in six years
Zynga Inc. shares were down 5% in after-hours trading Wednesday after the online-gaming company reported record third-quarter revenue that further illustrated its popularity during the pandemic but a growing loss.
The company reported a loss of $122 million, or 11 cents a share, compared with net income of $230 million, or 24 cents a share, in the year-ago quarter. (Last year, Zynga benefited from the sale of its building in San Francisco.)
Revenue soared 46% to a record $503 million from $345 million a year ago. Bookings, a key indicator of Zynga’s business, jumped 59% to $628 million.
The company also offered fourth-quarter revenue guidance of $570 million, and raised guidance for the full fiscal year.
“People found interactive entertainment pretty compelling, especially in mobile use,” Zynga Chief Executive Frank Gibeau told MarketWatch in a briefing before the results were announced. “There has been a huge amount of discovery, particularly in mobile.”
Underscoring its popularity, Zyng ZNGA, +3.78% a recorded its best average mobile daily-active users (31 million) and monthly-active users (83 million) in six years. Gibeau cited widespread playing of games such as “Words With Friends” and “CSR2.”
Zynga results were generally in line with Wall Street estimates. Analysts surveyed by FactSet had expected a loss of 13 cents a share on revenue of $627 million.
Zynga shares are up 61% this year as it continues to benefit from millions of Americans staying at home because of the coronavirus pandemic. The broader S&P 500 index SPX, +2.20% has improved nearly 7% in 2020.
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|From: Glenn Petersen||1/1/2021 9:48:39 AM|
|FarmVille Once Took Over Facebook. Now Everything Is FarmVille.|
December 31, 2020
December 31, 2020
In early 2009, when Facebook was still nascent in its efforts to swallow as much of the internet as possible, online games were not yet the behemoth they would become.
Then, that June, came FarmVille. If you weren’t among the tens of millions of people tending a cartoon patch of land on Facebook each day, piling up an endless stream of cutesy collectibles, you were still getting copious nags and nudges from your friends asking for help. The game either pulled Facebook users into an obsession or persistently reminded them that they were missing out on one.
The Flash-based game created by Zynga, designed to be played within Facebook, is shutting down on Thursday — yes, there were people still playing it — though its sequels that can be played through mobile apps will survive. But the original FarmVille lives on in the behaviors it instilled in everyday internet users and the growth-hacking techniques it perfected, now baked into virtually every site, service and app vying for your attention.
At its peak, the game had 32 million daily active users and nearly 85 million players over all. It helped transform Facebook from a place you went to check in on updates — mostly in text form — from friends and family into a time-eating destination itself.
“We thought of it as this new dimension in your social, not just a way to get games to people,” said Mark Pincus, who was chief executive of Zynga at the time and is now chairman of its board of directors. “I thought, People are just hanging out on these social networks like Facebook, and I want to give them something to do together.”
That was accomplished partly by drawing players into loops that were hard to pull themselves from. If you didn’t check in every day, your crops would wither and die; some players would set alarms so they wouldn’t forget. If you needed help, you could spend real money or send requests to your Facebook friends — a source of annoyance for nonplayers who were besieged with notifications and updates in their news feeds.
Ian Bogost, a game developer and professor at Wake Forest, said the behaviors FarmVille normalized had made it a pace car for the internet economy of the 2010s.
He did not mean that as praise.
The game encouraged people to draw in friends as resources to both themselves and the service they were using, Mr. Bogost said. It gamified attention and encouraged interaction loops in a way that is now being imitated by everything from Instagram to QAnon, he said.
“The internet itself is this bazaar of obsessive worlds where the goal is to bring you back to it in order to do the thing it offers, in order to get your attention and serve ads against it or otherwise derive value from that activity,” he said.
While other games had tried many of the same tactics — Mafia Wars was Zynga’s top hit at the time — FarmVille was the first to become a mainstream phenomenon. Mr. Pincus said that he frequently used to have dinner with Mark Zuckerberg, a co-founder of Facebook, and that in early 2009 he had been given advance notice that the platform would soon allow games to post to a user’s news feed. He said Mr. Zuckerberg told him that Zynga should flood the zone with new games and that Facebook would sort out the ones that resonated.
Though farming was far from a hot genre of games at the time, Mr. Pincus saw it as a relaxing activity that would appeal to a broad audience, especially among adults and women who had never spent hundreds of dollars on a console like the Xbox 360, PlayStation 3 or Nintendo Wii. It would be a preview of the soon-to-explode market for mobile games, with casual gamers shifting away from desktop as smartphones took hold.
The gaming industry was always chilly to FarmVille, despite its success. A Zynga executive was booed as he accepted an award at the Game Developers Conference in 2010, and Mr. Pincus said he had had trouble recruiting developers, who thought their peers wouldn’t respect them for working on the game.
In 2010, Time magazine named FarmVille one of “ The 50 Worst Inventions,” acknowledging how irresistible it was but calling it “barely a game.”
To many, the game will be remembered more for its presence in people’s news feeds than for the game itself. Facebook was well aware of the complaints.
After hearing from nonplayers that the game was spammy, Facebook restricted how much games’ could post to news feeds and send notifications. Facebook now aims to send fewer notifications only when they’re more likely to make an impact, said Vivek Sharma, a Facebook vice president and head of gaming.
He credited FarmVille for much of the rise of social gaming and said the “saga” over excessive notifications had taught Facebook some important lessons.
“I think people started to figure out some deeper behavioral things that needed to be tweaked in order for those applications to be self-sustaining and healthy,” he said. “And I think part of that is this idea that actually people do have a limit, and that limit changes over time.”
Even if people were annoyed by the notifications, there’s little doubt that they worked. Scott Koenigsberg, a director of product at Zynga, noted that the requests had been sent by players opting in to send them.
“Everybody saw a ‘lonely cow’ notification at some point or another, but those were all being shared by their friends who were playing the game,” he said.
Mia Consalvo, a professor in game studies and design at Concordia University in Canada, was among those who saw FarmVille constantly in front of her.
“When you log into Facebook, it’s like, ‘Oh, 12 of my friends need help,’” she said.
She questioned how social the game actually was, arguing that it didn’t create deep or sustained interactions.
“The game itself isn’t promoting a conversation between you and your friends, or encouraging you to spend time together within the game space,” she said. “It’s really just a mechanic of clicking a button.”
But those who went back every day said it had kept them in touch with friends and acquaintances, giving them something to talk about.
Maurie Sherman, 42, a radio producer in Toronto, said that he and a receptionist had played together and that he had gone to her desk daily to chat about it. “She would tell me about the pink cow she got,” he said.
He enjoyed it as an escape, a virtual stress ball and a soothing activity that would let his mind wander. He said he had spent more than $1,000 — that’s real money — over the years to improve his farm or to save time.
And he was absolutely guilty of sending the notifications, he said — but they always succeeded in getting him the help he wanted.
“There are people who would mute you or unfriend you just because they were tired of hearing that you needed help with your cows,” he said.
Jaime Tracy, 59, of Lancaster, Pa., said she had been “one of those annoying people” who made frequent requests for help until her friends and relatives had told her to knock it off.
But she loved the game, which she saw as a form of meditation, and played for more than five years. With her children grown and out of the house, “I had nothing else to do,” she said.
“You could just turn your mind off and plant some carrots,” she said.
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|To: Glenn Petersen who wrote (355)||8/6/2021 6:22:47 AM|
|From: Glenn Petersen|
|ZNGA is down 14% in early morning trading.|
Zynga Warns Pandemic Lift Is Ending for Videogame Companies
Easing of Covid-19 pandemic restrictions has started to bite game publishers
By Sarah E. Needleman
Wall Street Journal
Updated Aug. 5, 2021 6:19 pm ET
Zynga Inc., the mobile game company behind franchises such as FarmVille, said its audience declined more than it expected late in the second quarter, and the company lowered its full-year forecast for bookings, a key indicator of sales.
The disclosures helped send Zynga’s shares down about 16% in extended trading Thursday, though the company posted record revenue and bookings for the quarter that ended in June.
“What we started to see as we entered June was this great reopening,” Zynga Chief Executive Officer Frank Gibeau said in an interview. “People started traveling and going out to dinner again.”
Zynga isn’t the only game company that noted a recent slowdown in engagement coming out of the most recent quarter. Take-Two Interactive Software Inc. and Activision Blizzard Inc. also cited that trend in their quarterly financial reports this week, though both said their number of active users remained above prepandemic levels.
Separately, image-sharing company Pinterest Inc. and Roku Inc. said people have started spending less time using their products in recent weeks.
The biggest drop-off for Zynga was in users added at the start of the pandemic, the company said. Changes in Apple Inc.’s iOS operating system are also hurting, and the company warned there would be more pressure on ad revenue in the current quarter than in the previous one. Zynga has said it derived 49% of its revenue from Apple platforms and 46% of its revenue from Google platforms in 2020.
The decline in engagement and the impact of Apple’s new privacy rules led Zynga to lower its full-year guidance for bookings by 3% to $2.8 billion. Zynga also delayed the launch of “FarmVille 3” to the fourth quarter from the third, “because of the choppiness in the market,” Mr. Gibeau said. “Originally we were looking at September, but then clouds moved in,” he said. FarmVille, a social agriculture-simulation series, is one of Zynga’s oldest franchises and remains among its most popular.
To offset the declining engagement, Zynga said it is planning to host more live events in its games. The company is also counting on the many new studios it has acquired in recent years to help it attract and retain more players.
On Thursday, Zynga said it agreed to buy StarLark, the Beijing-based maker of “Golf Rival,” from Betta Games for $525 million in cash and stock. Other studios it has gobbled up in recent years include Echtra Games, Rollic and Peak Games. Zynga recently closed its purchase of mobile-advertising-services company Chartboost.
In its earnings report, Zynga called out Istanbul-based Rollic—in which it bought a controlling stake last year for $180 million—for surpassing one billion downloads. Rollic has 15 mobile games including hits such as “Hair Challenge” and “High Heels!”
Zynga said revenue climbed 59% in the second quarter from a year ago to reach $720 million. The company swung to a quarterly profit of $27.8 million, or 2 cents a share.
Write to Sarah E. Needleman at firstname.lastname@example.org
Zynga Warns Pandemic Lift Is Ending for Videogame Companies - WSJ
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