Some thoughts on Zynga

Yesterday, I struck one off my bucket list by appearing as a talking head on CCTV America to discuss Zynga’s CEO change.

[Don’t ask how I got roped into doing this or why they butchered my intro. Lets just say I learnt a lot about how cable TV news works!!]

Since I was brave enough to talk about this on national TV, I figured I would put some of my thoughts in writing.

I am not bullish on Zynga being able to turn itself around with a new CEO. Neither is Om Malik, it seems so at least I am in good company.

The main problem with Zynga is a company culture that was set in place back in 2008 – 2009 when it was scaling so ridiculously fast, that it ended up building a company of cut-throat mercenaries, focused more on distribution than on their products.

Those distribution tricks worked very well on Facebook and enabled Zynga to completely push out other games from Facebook. I remember literally not being able to run ads on Facebook because Zynga had bought out all right-rail inventory at crazy high CPC bids. When Facebook first launched its Ads API, Zynga was one of the first companies and the only non ad-tech company to have access to Facebook Ads API so they could optimize their own ads directly.

As for viral channels, Zynga definitely had a “special” relationship with Facebook which enabled them to completely dominate all Facebook viral channels (Newsfeed, Notifications and Requests.)

Unfortunately it is exactly this focus on optimizing distribution over game quality that has hurt Zynga’s ability to succeed on mobile. None of these channels exist on mobile (paid distribution on mobile is very different – there is no single network you can just buy out). And Zynga is certainly not in a position to “partner” with Google or Apple for special treatment in the way they did with Facebook, putting them at the same level as any independent game developer with a great game on these platforms. When your entire strategy is: find someone else’s good game, copy it, and win through distribution – that totally falls apart on a new platform where you cannot optimize distribution in the same way.

So what are Zynga’s options? I am not sure. But I hope Pincus allows Mattrick to make some drastic changes to the company structure & culture and really focus on product innovation. I agree with Om that this will be very hard to do, but it may be their only hope if they want to survive in the post-Facebook world.

Some thoughts on Zynga

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