Do not call it “gaming.” Zynga is a “play” company, even if its leader is a less than playful dude. On their first ever quarterly earnings call, Zynga’s executives, including CEO Mark Pincus, were asked to “talk about Mark as a person.” Bringing up a somewhat legit concern that could in no way be actually answered by Mark himself, one analyst asked Pincus to address “issues people have had” about him and his management style.” That’s analyst-speak for, “Why are you so terrible?,” a question I can’t imagine ever received a reasonable response.
Pincus explained that Zynga’s openness and transparency about its approach made the company’s quiet period difficult. During that time, a number of reports outlining Pincus’ aggressive manner were published. His motto is (or at least once was) “do evil.” He’s hard charging and a liability. He is an “imperial CEO.” He did anything possible just to just get revenues. As Ceo of a public company, his days of openness and transparency are paradoxically behind him, because now he gets to dodge and spin. “My values and Zynga’s values are on the wall here and on the web. And those values are my management style,” he said.
(Note: After some searching around, this Quora answer touting innovation, accountability, Zynga first, and meritocracy is the best resource for Zynga’s values I could come up with.)
Aside from that confrontation, Zynga’s earnings was marked mostly by deep-in-the-weeds discussions of MAUs, DAUs, ABPUs, MUPs, and other such acronyms measuring active users, unique users, monthly users, daily users, paying users and average bookings. Those details are all here.
Most interesting to me is the dichotomy between paying users (not gamers!) and free users. Not many of Zynga’s users pay via virtual credits or cash–only 2.9 million monthly uniques–but that’s where the company profits the most. That figure did increase by 13% over last quarter.
The rest of Zynga’s 153 million monthly unique users can only be monetized through ads. That’s fine, until you look at how many of Zynga’s users access the game via mobile device. It’s a big chunk. Eight of Zynga’s 12 new game launches last year were mobile. Zynga doesn’t break out its users or revenues by mobile and desktop, but in general, mobile ad spending is notoriously low. As a category it is so new that it hasn’t grown nearly as much as the amont of time users spend with their mobile devices has.
That probably explains why half of the ads you see on Words With Friends are house ads for another Zynga game and the other half are crappy text spam companies that promise to improve your Android’s battery life. There’s too much inventory and not enough ads. Last year mobile ad spend was estimated at $1.2 billion. Just as I joined the call, Pincus tossed out a number in the $30 billion range for potential mobile ad market size–almost the same amount currently spent on the 18-year-old display advertising market. I hope that was an estimate for 2020, not next year. If Zynga is pinning profitability on non-paying mobile users, it has a long way to wait.
In the meantime, the company is reaching for new sources of revenue. It signed that licensing deal with Hasbro and it’s reviving Zynga Poker. Zynga also launched its own cloud platform called “Z platform” and has migrated the majority of its games to it. Pincus and friends remained quiet on ways it might monetize that platform.
Zynga’s execs are weirdly fixated on the word “play.” The most visionary statement I heard came from Pincus when he said, “We want to see play reach the level of search, shop and share. Growth will be driven by the world making play part of their day.”