Zynga's Power Plays -- A Review

In recent weeks, we've been heavily covering top social game developer Zynga over on Inside Social Games. Here's a look at how various news items about the company point to its domination plans. Zynga, it should be noted, doesn't seem to enjoy publicity. The only news it has officially released recently was a "momentum" announcement this week, talking about how it has grown from 30 million monthly active users in April to 129 million now through games like FarmVille, Mafia Wars, Zynga Poker (formerly Texas Hold 'Em) and YoVille. It has 128 million monthly active users on its Facebook games alone, according to AppData, although this number double-counts users who play more than one Zynga game. It also has some top applications on MySpace and other social gaming platforms. Meanwhile, the company is on track to make around $200 million, we've been hearing from industry sources. Here's how recent news about the company adds up: New games: Zynga launched FarmVille in June, long after other companies offered similar virtual farming games -- but Zynga's version has dominated, hitting 50 million monthly active users last week. Even Facebook is "scared" of how big the game has gotten, we've heard. While Zynga has battled Playdom for a long time, whether in courts or in building directly competitive games (see the "Mob Wars" saga), it now appears to be turning its sights on Playfish. Earlier this week, we spotted a new Zynga game called "Café World," a virtual restaurant game that appears to be competing directly with Playfish hit Restaurant City. While Restaurant City has 15.7 million monthly actives, Café World is just getting started -- it grew from around forty users earlier this week to almost 40,000 as of today. Lawsuits: The company is suing top rival Playdom, along with Greenpatch Inc, accusing the former of trademark infringement and the latter of copyright infringement. Both cases have been running for months, and to our knowledge remain unsettled. While we haven't seen the specific claims, Zynga's financial strength generally means it has the ability to take smaller companies to court whenever it believes it has a case. New revenue: While Zynga has been making its money from virtual goods through advertising offers and web and mobile payment services, it is also apparently introducing pre-paid gift cards. We spotted a potential deal between the company and card company InComm earlier this week; the way the service works is that people can pay for cards in retail stores using cash, then use codes on those cards to buy virtual goods in games. Virtual worlds already use this sort of service to monetize teenage users, as teens don't typically have access to credit cards and mobile phone accounts needed for the other forms of payment. IPO plans: Zynga has long considered when it might make an initial public offering, as we reviewed in this in-depth piece earlier this week. While we don't expect it to make any moves in this front this year, look for it to go public sometime next year. The company is still proving the long-term viability of its method for making hit games, as well as its ability continue making money through revenue streams like offers. But many of its games, like FarmVille and Cafe World, are becoming increasingly sophisticated and original. An IPO could give the company additional cash to use for things like advertising -- which it does aggressively -- and possibly for purchases of smaller developers.

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Zynga's Power Plays -- A Review

Eric Eldon

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Eric Eldon