Zynga Is Now Worth Lesser Than its Own Headquarters: Riches to Rags

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Zynga is facing ‘Once upon a time’ moment lately; Once a promising gaming start-up, Zynga is now biting the dust and if that was not enough to get convince about the hard time the company is going through, here is something worst; its Office headquarter is worth more than Zynga itself. During its hay days, Zynga bought the colossal 7 story tall, 668,000 square feet building for $228 million in a posh area of San Francisco which in today’s date costs approximately $540 million. Though the company’s valuation is hovering around $2 billion but with $1.5 million cash reserves; Therefore, according to analysts, Zynga is valued around $500 million which is quite lesser than its headquarter’s market price.

In earlier days, Zynga garnered prominence from its games like Farmville and Words With Friends. During its golden era in 2011, Zynga’s share soared to $10 while the headcount rose to 3,000 people, but later the company failed to capitalize on its market exposure and failed to replicate the success it garnered with its early products. Consequently, Zynga’s share crashed to $2 share value and the workforce is cut-off to 1700 people. Comparing the good old days with the current struggling period for Zynga, we can decipher some of the real reason for its downfall.

Not everything is going against Zynga. The company is showing signs of gaining lost grounds as its revenues for the Q1 2016 grew by 8% YoY. Zynga’s slot games and Words With Friends have given Zynga a relief space as its revenues for Q1 2016 soared to $187 million. The astonishing numbers surprised Zynga and the analysts alike who had estimated the revenue to range between $150 million to $165 million.


Zynga Growth and Dominant Facebook

One of the prime reasons behind Zynga’s debacle is the end of the partnership with Facebook. In early days, Zynga grew leaps and bounds by leveraging on the success and reach of Facebook and registered humongous growth. In 2010, the company filed for a much-talked $1 billion IPO that caught the eyeballs of many investors. The partnership, however, didn’t last long due to the demanding nature of Facebook. Zynga started gunning up for war against Facebook with Zynga Live and proved to be the last nail in the coffin.

Facebook used every possible way to gain control over Zynga in the past; demanding 30% fee for credits and even forced Zynga to agree to its long-term deal, failing to which threaten to shut down Zynga’s notifications and in worst case its games too. That forced Pincus (Zynga’s founder) to launch its games on the separate platform.

Missed opportunities by Zynga

The desktop engagement was abating as smartphone market boomed in 2012. Consequently, the mobile gaming platform also surged to its peaks. The one’s who recognised this transition fared well while others suffered.

Zynga was among the latter ones as it failed to recognize the opportunities provided by mobile platforms. As a result in 2012, Zynga’s existence was questioned as it was forced to fire its 100 employees, and even had to shut down its Boston Office. As said earlier, the failure of Zynga to capitalize on the booming mobile gaming platform in 2012, resulted in the sizable decline in its revenue.

Steadying the Drowning Ship

A few months earlier Frank Gibeau, who previously worked for Electronic Arts mobile division, replaced Mark Pincus, Zynga’s founder, as CEO. The Q1 2016 revenue results of the company indicate Gibeau is doing a decent job of steadying Zynga’s ship.


The major success can be attributed to the fact that Zynga decided to move away its Facebook business to more propitious mobile platform and saw a surge of 7% daily mobile users Y-o-Y (Q1 2015- Q1 2016). And Zynga’ a chunk of its online traffic come from Apple’s platform overtaking Facebook by a large extent.

“Some things that jumped out at me – our mobile momentum continues to grow. We demonstrated some strong Y-o-Y growth in bookings and audience. We’re up to 76% of our total revenue on mobile, which is an all-time high we’re also in a position where Apple is our platform.” Exclaimed, Excited Frank Gibeau.

Gibeau also focused his attention on reforming Zynga’s working model and getting most out of the mobile platform by hiring right kind of people.

“We can do a lot of things on an operating level that will help us make better games and provide shareholders and investors with a better return.” – Gibeau

Another important factor that is helping Zynga to slowly win back its lost market is the success of Zynga’s new and old games alike. In Q1 2016, Zynga’s slot games division saw a massive 78% growth in user base over the same period last year, whereas, Zynga’s 6-year-old game, Words With Friends, that received few new features and some add-ons, garnered 60% Y-o-Y surge in bookings.

The upcoming games by Zynga are looking promising and may help Zynga to fight the tides. Farmville, tropical escape, CSR2, and Dawn of Titans are expected to be launched in the second half of 2016. With such things lined up and in the wake of booming mobile gaming market we can expect that Zynga has got a long way to go before it wins back all lost markets and users.


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