Nov 20, 2010 Zynga Announces New Game, CityVille. We can expect CityVille to have the same success as the other Zynga games such as FrontierVille and FarmVille. These retailers still have stock.
Zynga went public in 2011, and it grew quickly on the strength of social games like FarmVille. But it hit the skids in 2013, and it began going downhill. Frank Gibeau, a former Electronic Arts executive, joined as CEO in 2016, taking over from Mark Pincus, the original CEO, who replaced his own replacement, Don Mattrick, who was Gibeau’s former colleague from EA. (Did you follow all that?)
It was a long slog, but Zynga has gone through a turnaround. In fact, Gibeau said this week in an interview with GamesBeat that the company’s “turnaround is now complete.” The company broke even, even with 1,778 employees, and it is 39 percent bookings growth in 2019.
Part of the solution has been acquisitions. Starting in November 2017, Zynga began making new acquisitions, such as buying Peak Games board and card games for $100 million. In May, Zynga also bought Merge Dragons maker Gram Games for $250 million, and then in December, it got a 80 percent of Small Giant Games, maker of Empires & Puzzles, for $560 million.
- Jan 10, 2013 For those who play the addictive Cityville game on Zynga or Facebook and also love Monopoly, this is a great gift. On the downside, it only has 4 player pieces, so I had to find random objects around the house to allow for more players. The plus side, it comes with 85 free city cash that you can use in the online game.
- Sep 12, 2013 How Zynga went from social gaming powerhouse to has-been Gaming giant has been on a wild ride in just 5 short years—while losing $600M. Cyrus Farivar - Sep 12, 2013 1:00 pm UTC.
But Zynga has doubled down on its “forever franchises” (those that can top $100 million in a year and sustain a business for five years or more) and driven growth on existing games like Words With Friends and CSR Racing 2. Zynga Poker is still kind of limping, but nine new games are in the works.
Gibeau will be a speaker in a fireside chat with Michael Metzger of Drake Star Partners at our GamesBeat Summit 2019, which takes place in Los Angeles on April 23-24. Here’s an edited transcript of our interview.
Above: Frank Gibeau, CEO of Zynga.
GamesBeat: It sounds like you guys had a good quarter there.
Frank Gibeau: It was a good quarter and a good year. We beat on the top and the bottom. We even beat our raised guidance for the quarter. We’re set up for a really strong 2019. The business has a lot of momentum. The thing we’re most excited about is how Gram with Merge Dragons and Small Giant with Empire of Puzzles have fit nicely into the portfolio alongside Words With Friends, CSR 2, and Zynga Poker. We have a good lineup of games to create the base for us, and then we have more than nine games being built right now that will come out over the next couple of years, with a bunch coming in soft launch
It’s an exciting time. We’re out of the turnaround. We’re done. There’s more “Spill on aisle three!” cleanup stuff. We’re focused in on growing the business, making games. It’s a lot of fun. Mobile is the place to be right now.
GamesBeat: You always had the declining Facebook desktop business and rising mobile. Has that stabilized, or is that still happening, still slowing down overall growth?
Gibeau: There’s a couple ways to think about it. We’re 93-plus percent mobile now. When we started I think we were in the 60s. Over the last couple of years we’ve accelerated the transition to mobile. That’s part of how we did the cleanup on the turnaround, to start to exit and focus in on where we had the highest growth. That was in mobile.
The good news is that more than 90 percent of the business is in mobile. We still have a headwind from what we call legacy mobile and web. We have to overcome that when we talk about how we’re going to grow the company. It’s going down. It hasn’t reached bottom yet, but it’s as close to the bottom as it’s ever been. When you think about how we performed this year and how we’ll perform next year, we always start out with a $50 to $70 million headwind in revenue decline from those businesses. Then you tack on the growth in our forever franchises and the new games coming in. We’re almost to the end, but it’s still an artifact that we have to deal with.
I think what’s encouraging is if you remove that from our growth performance, we’re growing even faster. We had a great year over year in the quarter, where I think we grew 19 percent on the top end. If you took out the headwind from web we’d be growing in the 20s. It’s encouraging to see.
Above: Empires & Puzzles has more than 10 million downloads.
GamesBeat: Are you already more confident about Empires and Puzzles than acquisition time?
Gibeau: Last week it was in the top 10 on Android. Merge Dragons was in the top 20. We see a lot of momentum in those two franchises, especially on Android and international, which as you know has been a key strategy for us. We’re falling more in love with those guys every day.
If you look forward into next year, we’re projecting that we’ll grow the company 39 percent on the top line. We’re going to try and achieve $1.35 billion on the top. We finished this year just a bit below a billion. It’s a 39 percent growth rate in terms of bookings. It should make us one of the fastest growing game companies, if not the fastest growing public game company, next year. That should set us up for growth in 2020 and beyond.
A big part of that is Empires and Puzzles and Merge Dragons, but also you’ll see growth from Words With Friends and CSR 2. Poker is going to be in a good position too. We have a new lineup of games coming. We’ll have a bunch of them in soft launch in the near future, some of them in the next few weeks actually. They’ll include Star Wars and Harry Potter, Game of Thrones, CityVille, FarmVille. We’ll have additional games from Gram and Small Giant.
We’re going to leave 2018 with about a billion dollars of revenue from our top five franchises, our five forever franchises. Those are going to grow, and then you’ll layer in the new games. We’re very fired up about the fact that we’ll be growing in the next couple of years.
Above: Zynga’s CSR2 has added new vehicles from the Geneva Motor Show.
GamesBeat: Electronic Arts gave a mixed outlook for mobile. They described it as a difficult business. Command and Conquer didn’t do as well as they’d hoped. You guys seem a lot more optimistic than EA and some others in the space.
Gibeau: As you know, I spent some time there. I ran the EA mobile business for a while, and we did fine. I think the issue for me is that–it’s not the fact that mobile is competitive. It’s the fact that it’s the largest platform, the fastest-growing platform. It reaches the most people and the most devices. It’s an awesome platform to be on. It’s competitive, but it’s pro ball. You have to execute. You have to be able to compete.
We don’t typically blame the competition around here. We try to focus in on what we can do better than anyone else in the world. What is it about our games that connects with players? How do we go out and find those players and get them to connect with our games and stay with them for a long time?
I understand their point of view, but it’s one of those things where — at Zynga we’re a mobile-first company. We’re focused on mobile. We’ve spent the last few years really getting fit to be able to compete and grow the business. If we were worried about the competition I wouldn’t publicly tell you that we’re going to grow the company 39 percent next year. Poker has been around 10 years. Words With Friends has been around eight years. CSR is a five-year-old franchise. Empires and Puzzles and Merge Dragons are going like hotcakes now. They’re growing fast.
Merge Dragons wasn’t that high in the charts when we started working with them. We think the combination of our studios, our publishing platform, and the fact that we’re out here being inquisitive–we’re out looking for franchises and talented game teams that want to join a company like ours. 2018 was a strong year. We leave it with a lot of momentum. It’s not that we aren’t paranoid about the competition. We just don’t blame it.
Above: Zynga’s leaders. Frank Gibeau, CEO, is on far left.
GamesBeat: Is Poker still trying to recover right now?
Gibeau: It had a really good first half of 2018. Then, about midsummer, it got some hits from a Facebook platform shift, as well as some challenges inside the game economy. We’ve been working through that. As you know, with live services, it’s a marathon. You’ll have periods of time where it goes rapidly. You might level off a bit, have to make some changes, and then you get back to growth.
Does Zynga Still Have Cityville As A Game For Macs Download
That’s the story right now on Poker. It finished 2018 in line with what it did in 2017, which was phenomenal year, so it’s not like it’s off its peak. It’s performing at its peak. It’s just not growing as much as we want it to. From the time I came into the company, we introduced some new things like tournaments, and the product grew about 96 percent in that period. When you grow that fast, sometimes you have to level off a bit and look at things again.
That’s where we’re at right now. We wish it was doing better, but we feel like we have a good handle on it. We need to make some adjustments to some of the tournament structures, the economy. It’ll return to growth in 2019. It remains a forever franchise for us. We hope to be in business with it for another 10 years. But it’s one of those things where, if you look at the Q4 timeframe, it was really a story of Merge Dragons, Words With Friends, and CSR. Poker did well, but it wasn’t growing year over year as much as we wanted.
GamesBeat: As far as forever franchises, can you talk about that again and why some of these might be considered your forever franchises, even if they’re pretty new?
Gibeau: We have a definition for it, which is a game that does over $100 million a year in bookings, and a game we believe can last for five years or more. We have a couple of other definitions in terms of engagement metrics. When you look at Merge Dragons and Empires and Puzzles, they’re well above the $100 million mark and growing. They have a global audience. They’re about a year and a half into their lives, both below two years I think. We believe these games have the potential and the depth to do that same business through the next couple of years.
Above: Zynga Poker Classic
When we greenlight new games, like the nine games we’ve been talking about, we look at the potential in each game and ask ourselves, “Can this last for five years or more? Does it reach a global audience? Does it have a potential to do more than $100 million in a year?” Maybe not the first year, because in mobile you have to grow into it, but it’s definitely not a buzzword. We use it as a decision-making point to classify the games and the investments we make at Zynga.
GamesBeat: You’re at 1,700 people. Is that going to change much in the coming year?
Gibeau: A lot of that is international now. Our European organization is really cool. We have two teams in Istanbul, two teams in Helsinki, teams in London and Brighton. We’ve been growing internationally, because mobile has so much talent in terms of developers and franchises everywhere. We’ve been expanding through acquisitions. We’ve actually expanded our team in Bangalore. They handle a lot of new mobile games. We’ve been investing in new games there for India as well.
Does Zynga Still Have Cityville As A Game For Macs Play
I think you’ll see us hang around that number. But if we do scale it up, it’ll be probably more related to acquisition activity than organic growth. We feel like we have a good handle on the size of our company and our operating margins. As we look at how we’re going to grow in 2019 and 2020, we don’t see a big headcount lift. We see a lot more efficiency than a scaling-up army of people.