All about social media games creator Zygna

1. Zynga is tight-lipped about its revenues, but estimates range between US$250 million to $450 million annually, while the company is valued at more than $4.5 billion.

AppData.com statistics show that the company's games have 211 million monthly active users, which makes Zynga about four times larger than its nearest rival, Electronic Arts.

"In a very short time, Zynga has risen in popularity because it has changed the norms of the games by attracting casual players instead of the traditional hard core player," says Daniel Lee, regional digital director, Southeast Asia for Euro RSCG.

Compared to the generation of console-based video game players, Zynga's players invest a relatively short amount of time playing games whether at work or while browsing the internet.

"Zynga is addictive, but requires less time than other games," explains Gregory Birge, managing director, F5 Consulting. "It can be played alone or people can use it to engage with their friends. It does not require a console or gaming mechanics, and you can access it from anywhere."

2. Zynga's social gaming takes a step backward in terms of sophistication.

Players in FarmVille, for instance, tend to virtual farms by planting and harvesting crops. Players can also buy online goods using credit cards, PayPal accounts or Facebook credits. Through this Zynga makes money from users who buy virtual goods or pay to move themselves up in the games.

While some analysts and investors question Zynga's ability to keep producing hit games in an ever more crowded field, CEO Mark Pincus's optimism seems to be borne out. His new game FrontierVille attracted 20 million players only a month after its release this year.

3. Zynga's short history has not been without controversy.

Critics have blogged about Pincus' unethical comments and have blamed the company for allowing advertisers to sign up players for subscriptions without their knowledge and inducing them to pay for costly text-messaging services. Terms such as 'ScamVille,' began to float around and some users even filed a class-action lawsuit against Zynga. As a result, Zynga pulled the ads.

4. Social gaming offers many opportunities to brands and marketers.

"Social gaming offers brands the chance to engage with their customers by buying or renting gaming modules," says Birge. "Marketers must use the database to increase the value of their brands and not push their messages through advertisements."

Lee agrees: "There are technical possibilities, but at the moment marketers are watching how they can adapt their brand messaging to this growing community."

5. Zynga has been tipped to launch an IPO, but its reliance on Facebook applications means that it will need to establish its independence first.

To do this, Zynga announced a deal with Yahoo's homepage, messenger and mail and introduced a Farmville app for the iPhone4.

Google and Zynga are also said to be in the early stages of exploring collaboration, though the details remain under wraps.

Zynga is attracting a flurry of investors, most recently in Japan when Softbank put $150 million into the company.

In terms of developing markets, Zynga has a foothold in China, purchasing gaming company XPD Media and opening a Beijing office. It also set up an office in India earlier this year. These deals reflect Zynga's intent to move into the Asian gaming market, to compete with the likes of Tencent and Shanda from China and Japan's Dena Group. But Zynga may face challenges as social gaming is already hugely popular in many Asian markets, with a massive user base, as well as plenty of talent and innovation.

 

What is means for...

MARKETERS

• Marketers who wish to promote their brands can do so only through below-the-line activities by engaging the customers.
• Live ads, which push the messages have already proven destructive to the brand and resulted in decreased user traffic.
• Therefore, brands must instead consider renting or buying the gaming modules and use them for purposes of branding.

CONSUMERS

• Zynga is attracting casual players as opposed to the hard-core set-top box video-gaming generation.
• They regard Zynga as a form of relaxation and a way to engage with their friends.
• As the games are driven through a social media network, most players reject direct advertising, which they consider intrusive.  
• Zynga offers gamers the ability to access it from anywhere, without having to invest in gadgets and mechanics and yet enables them to go beyond a single player format.

This article was originally published in the 12 August 2010 issue of Media.