Zynga Sees Consecutive Quarterly Success, Prepares for the Future - The UpStream

Zynga Sees Consecutive Quarterly Success, Prepares for the Future

posted Sunday Nov 8, 2015 by Nicholas DiMeo

Zynga Sees Consecutive Quarterly Success, Prepares for the Future

While all the talk is about Activision's purchase of King for almost $6 billion, there are some other movers and shakers in the mobile game space right now. Most notably is Zynga, who recently lost its top spot to King and has had its founder, Mark Pincus, return as CEO after a revival plan. In the past three quarters, Zynga has beaten its estimates each and every time, with two of them being under the guidance of Pincus.

Zynga is able to attest its recent success to still-popular titles like Words With Friends, while games like Wizard of Oz Slots and Empires & Allies are showing high-level growth. The news of another consecutive quarter's estimated being topped caused Zynga's stock to rise 4 percent, bringing it to $2.55 per share. This values Zynga at $2.3 billion, just 17 percent of its high-mark five years ago. The company is not without its troubles, though. Daily users are down 21 percent from last year, to just 19 million players.

Even with the roller coaster of a story, Pincus says that nothing will deter the future success of the company. In an interview, he gives credit to FarmVille 2 web for doing so well, and says that Zynga's Poker game will drive growth next year.

We've been seeing, for the last three quarters, a good strength in our live franchises, especially on FarmVille 2 web and Words with Friends mobile, as well as slots games on mobile like our new Wizard of Oz slots. We've seen a decent contribution from our new game Empires and Allies. But all three quarters, the live game team performance has exceeded our expectations. The level of advertiser demand and interest in our Words with Friends audience and other mobile audiences has continued to be a pleasant surprise for us.

When asked about the King acquisition, Pincus said that he believes companies need to acquire, but also need to aim to capture a large audience and hold them over time through a diverse selection of games. The CEO said that Zynga has been doing this all along, and will continue to do so.

We (Zynga) have been investing in those (areas) across social casino, across casual with Words with Friends, and best expressed in action strategy with the launch of Empires and Allies and the acquisition of NaturalMotion. When you look at the Activision-King deal, I think it makes a lot of sense for all those reasons. Bobby Kotick is adding key pieces of the puzzle. In one fell swoop he gets mobile, casual, Asia, and women players. He's positioning his company well.

With the success of Zynga riding high right now, it is reasonable for Pincus to rest his laurels on those accomplishments. However Zynga now lacks the blank check that King just picked up by moving over to Activision. The next year will certainly be an interesting one for both companies, and it will be intriguing to see who is at the top by the end of 2016. There's a battle that is about to go down, and when the dust settles, I believe only one company will truly stand above the rest. It seems to be a war between passion and money, and sometimes that can be a lop-sided fight.

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