Leveling up the gaming industry…

CEO Sana Choudary talks about “How Zynga can turn its fate around in the next 6 months”

September 8, 2012

Original Post at Inside Social Games

Unless you have been living under a rock you have seen the doom and gloom stories of Zynga—low Wall Street confidence, falling stock price, demotion and resignation of major executives and the list goes on. Industry veterans say it’s because Zynga has been focusing on tactics and metrics rather than creativity and innovation. Game designers say the non-gamer turned gamers have finally realized Zynga is giving them glorified slot machines filled with clicking grinds and meaningless rewards and that just doesn’t cut it anymore.

Meanwhile, Zynga’s fast follows have become faster–new skins of games launched by other developers with higher production quality, fancier sounds and shorter times before the player hits a paywall. All its games are based on doing that which has helped them succeed in the past—a zealous focus on traffic arbitrage, retention and monetization and iterating based on the metrics that measure them.

It is this metrics drive that helped it win against Playdom and Playfish by establishing and maintaining the strongest customer acquisition strategic position. Unfortunately for Zynga this strategy only contributes to company growth when you are expanding the pie by adding new non-gamers into the gamer mix. Many thanks to Tadhg Kelly for his detailed post describing Zynga’s current state of affairs.

To continue to grow, a new strategic position must be found and a metrics only approach cannot help provide insight into what that would be. This is because the insights that metrics provide are limited to what they have been designed to measure. They never help you ask new qualitative questions that the data does not reflect and in the famous words of Einstein: “Not everything that counts can be measured. Not everything that can be measured counts.”

So how does Zynga find its new strategic position? After all they do have a large player base that believes and trusts in the Zynga brand to bring in new game experiences. The answer is the infusion to the company of new DNA primarily of developers who are focused on new game play innovation. To do this Zynga would have to do things very differently than what they are used to.

Invest in makers of innovative game franchises

Here is a list of Zynga’s acquisitions this year.

If you look closely at size of company, the number of games launched and their performance you will start seeing a trend. With the exception of one, all the acquisitions were talent acquisitions of teams bought in to scale up existing Zynga tech infrastructure. The one exception to this was OMGPOP, bought for Draw Something’s userbase as it was the same demo as Zynga’s existing mobile games.

None of these acquisitions were of studios bought for their ability to innovate on new ways to compete or make new types of games that meet underserved customer demos or unmet needs—the ingredients of truly innovative successful game IPs.

Those types of studios exist and despite the rocky investment climate for game studios* many of them have not only survived but thrived. They have passionate players playing the game for much longer lifetimes than the Zynga games (I have seen upwards of 9 month lifetimes in several games recently).

To get a choice to select from the best–Zynga should strategically invest in innovative franchise game creators that have shown some traction in initial user uptake and monetization at low or no distribution budgets. It should then leave these studios to create for 6-8 months on its own with little Zynga interference. At the end of this time any studio that has successfully created new innovative IPs even if it does not match Zynga’s demo should than be acquired to run an internal studio focused on fully leveraging that market.

Fix reputations problems in parallel to win win publishing deal offers

Zynga has become more active with publishing recently. From those who have entered these deals I have only heard good things. Unlike some of the Draconian “kill all other options for startup deals” offered by companies like 6waves, Zynga deals have been pretty fair—they do not own IP, do not require exclusive right of first refusal on sequels or future IPs. In short, they are letting your first born stay with you.

Unfortunately, the overwhelming majority of small to mid-sized developers (the truly innovative of the bunch) will never approach Zynga for publishing deals. A quick survey to YetiZen’s San Francisco Game Developer Workshop community which has over 5000 members came back with 61 percent of developers claiming they will never consider working with Zynga in any capacity.

This shouldn’t be surprising. Lets face it developers love digging on Zynga. Let’s stick it to the man! That being said, Zynga has had questionable practices in the past affecting developers. News travels fast in the developer community and reputations become entrenched.

At the end of the day most large publishers have the exact same key selling point to developers—a large distribution base. Some like Zynga have it and others buy it. What distinguishes publishers is reputation and personal relationships. Instead of believing this bad reputation is not a real issue and their fair deals will pave the way to bringing more developers to work with them, Zynga must really begin repairing its relationships with game developers.

The best way to do this is showing support for education in the game developer ecosystem. Sure at first developers will take pug shots but if Zynga consistently educates the market on what it has learned in launching various successful titles developers will start trusting it more, allowing it to adequately canvas the market for strong IPs it can publish.

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