walkitout (walkitout) wrote,

Zynga IPO

The maker of everything-ville did finally announce an IPO.

Here is an analysis:


I've been mulling this over in the leadup to the announcement, listening to some analysis on Bloomberg and reading a little bit online. I used to play a _lot_ of fb games last year -- maybe for a little over a year, certainly not more than 2 years all told. But when I got hooked on iPad games like PopCap's Plants v. Zombies, and eventually on a series of Match 3 games, I quit fb games entirely. It was not a conscious decision. The iPad games have GameCenter connectivity, but I've never created a GameCenter account, so if there's a social component to any of the games I play, I don't know about it and I like it that way.

Mashable's analysis of the filing points out that Zynga hasn't necessarily been adding more users, altho they're getting even better about extracting cash from them. When I played Farm Town (not a zynga game), Farmville (Zynga) and various other games at various points in time, I did indeed buy crap for them (well, at least for the farm games. I don't recall spending money in any other games, altho I may have). Switching to buying games on the iPad turns out to be cheaper than playing "free" fb games, at least for me, and I suspect I'm not alone.

While some analysts worry that Zynga might be hurt some day if their relationship with FB changes, the deal between the two of them seems to extend to or through 2015, and is roughly equivalent to the Apple subscription deal (primary payment in app must be through the environment's payment system and the cut to the environment within that payment system is 30%). I can't imagine any obvious reason for FB to try to get more (or to put up with less, since where is Zynga going to go?).

One analyst on tv said that the relative valuation of Electronic Arts vs. Zynga made no sense, when contemplating the number of deals that EA has (that is, EA is quite resilient in the face of any one change). While that is true, Zynga is sitting at an amazing bottleneck of traffic, and I'd bet that their user base is (a) bigger than EAs and (b) spends more money with Zynga over the course of a year than an EA customer spends with them. But I don't know; I haven't seen numbers.

The problem _I_ see is simple: I quit playing fb games and I did it sort of accidentally. I went from not playing computer games for years and years, to playing computer games every single day for an hour or more to playing a completely different computer game (that was a buy-once, rather than a free but buy crap model) and there was absolutely no pain to the transition. Some things I do, I do because I am spectrum-y and this might be an example of that: the social aspect of the games is not "sticky" for me. Other things I do, I do because I "baaa" right along with the rest of the herd. I don't even lead; I'm a second rank sheep, but there are a lot of sheep right behind me. What if Zynga's users are about to up and switch to another format in a very unpredictable way? That might make Zynga like a movie production company: super profitable, except when it's not.

Anyone out there who, like me, used to play fb games but sort of accidentally stopped? Is this a common phenomena?

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