Zynga listed ten big risk factors in the documents filed with the Securities Exchange Commission ahead of the game developer’s initial public offering.
The ten risks that Facebook’s biggest developer faces are:
- If the company is unable to maintain a good relationship with Facebook, business will suffer.
- Zynga operates in a new and rapidly changing industry, which makes it difficult to evaluate the business and prospects.
- The company has a new business model and a short operating history, which makes it difficult to evaluate our prospects and future financial results and may increase the risk that Zynga will not be successful.
- Zynga relies on a small percentage of players for nearly all of its revenue.
- A small number of games have generated a majority of Zynga’s revenue, and the company must continue to launch and enhance games that attract and retain a significant number of paying players in order to grow revenue and sustain a competitive position.
- A significant majority of Zynga’s game traffic is hosted by a single vendor, and any failure or significant interruption in the network could impact Zynga’s operations and harm the business
- Security breaches, computer viruses and computer hacking attacks could harm Zynga’s business and operations.
- If Zynga fails to effectively manage its growth, that could harm the business and operating results.
- Growth prospects will suffer if Zynga is unable to develop successful games for mobile platforms.
- Expansion into international markets is important for growth, and as Zynga expands internationally, the company faces additional business, political, regulatory, operational, financial and economic risks, any of which could increase costs and hinder such growth.