Mobile Move a Must for Zynga
Zynga Pops, Then Fizzles
It was billed as the largest IPO by a tech company since Google. But soon after Zynga actually started trading on the Nasdaq this morning, it saw its shares slip.
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Analysis: Can Zynga Break Free From Facebook?
David Ko, Zynga's chief mobile officer, has one of the most important and pressure-filled at the online gaming company—he's charged with figuring out ways to get people to play Zynga's games on tablets and smartphones.
Zynga and Ko want to build a viable business outside of Facebook, the world's largest social network, where Zynga generated more than 94 percent its revenue in the third quarter.
With Facebook imposing a 30 percent tax on money made on its website, it is an economic imperative that Ko drive his company's users to other platforms so that Zynga can keep more money for itself.
He is, in essence, on the front lines of Zynga's battle for independence, which could be one of the reasons why he dubbed his office enclave the "war room," where he works on new game ideas, schedules and strategic plans.
And so far, Ko's team has fired off a few successful rounds. Zynga's games are climbing their way up Apple's app store charts.
On the App Store on Wednesday, Zynga had the No. 2 app overall on iTunes, while it was in second and fifth place in the top paid app category. It held No. 1 spots on both lists a week ago and has made the list for five top grossing apps, according to Appshopper.com.
With about 1 billion apps being downloaded each month on both Apple or Google's Android devices, Zynga is attempting to ride that growth by making more games for those platforms.
"Those numbers are growing really fast and our users or player numbers reflect that," Ko said in an interview.
Zynga said on its IPO roadshow that it had 13 million active daily users on mobile devices in November, a 17 percent increase from the 11.1 million mobile players it reported in October. Trouble is, that's still 40 million fewer users than the roughly 53 million daily active Zynga users on Facebook this week.
The good news is that its growth rate on mobile devices is greater than it is on Facebook. In fact, the number of Zynga users on Facebook declined 5 percent year-over-year in December, according to data tracking website AppData.com.
While Ko said popular mobile games "Scramble with Friends" and "Words with Friends" are poised for growth, it may be more wishful thinking than an actual business reality that these games could steal the spotlight from Zynga's main revenue source, Facebook games such as "CastleVille" and "FarmVille."
"There is a monetization difference between PC and mobile," Ko said, without elaborating.
Wedbush Securities analyst Michael Pachter said mobile games make a fraction of the money what Zynga's games make on computers because handheld screens are smaller, the experience is less immersive and there are fewer opportunities for players to spend money.
The perceived Facebook crutch is one of the factors dragging down Zynga's shares since it went public on December 16. But extricating itself from the social network won't exactly be a financial walk in the park.
Investing in mobile games isn't cheap, and the price to stay ahead of the curve could be high, said Steve Soranno, equity analyst at Calvert Investment Management, which has $12 billion of assets under management.
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