The History of Zynga: A Story of Their Huge Growth
Discover the History of Zynga and how they grew to be a gaming giant in a few short years. Learn about their growth, games & ventures into gambling.
They're probably responsible for most of the notifications you get on Facebook. Whether it's from a friend, a work colleague or family, Zynga has produced games that captured the imagination of millions around the world.
Zynga is undoubtedly one of the largest players in social gaming (rival King rules the chart) and their recent forays have been into real-money gaming.
From its beginnings under Facebook's wing, the game company has grown and extended its reaches to mobile devices everywhere. We chart its growth from the early games that eventually led to its meteoric rise to prominence, the success with such titles as FarmVille and CityVille, and finally Zynga Poker which was the gateway for Zynga into real-money gaming.
Mark Pincus sets up Presidio Media to take up the opportunity that Facebook gave developers to create applications on its social network using its API.
Pinkus rebrands his new company, calling it Zynga after the name of his late American bulldog.
Zynga launches its first mobile game on Facebook, Texas Hold’em, which would later be renamed Zynga Poker.
Zynga raises $10 million in its first round of venture funding.
Zynga launches Mafia Wars and buys a social network game called YoVille, which would form the basis of its best-known title, FarmVille.
Zynga becomes the app developer with the most monthly active users (MAU) on Facebook, with 40 million people playing their games.
Zynga launches FarmVille, which becomes the largest game on Facebook, attracting over 10 million users daily and spawns a sequel, FarmVille 2, and a spin-off called CityVille.
CityVille edges over Farmville to become the most popular game on Facebook with 61 MAU.
Zynga goes public and starts trading on NASDAQ.
"Zynga with Friends" network announced with the aim of connecting people playing Zynga titles on different mobile platforms.
Zynga removes some of its games and announces that it will lay off about 18% of its workforce.
Zynga buys British software company NaturalMotion for $527 million.
Along with hiring more software engineers and technical designers, Zynga leases new office space in Orlando.
The Zynga line-up consisted of 27 Facebook games and 17 titles that can be installed on iPhone, iPad and Android mobile devices.
Mark Pincus, after leaving Zynga, created Superlabs, which is then acquired by the company in a $1 purchase which indicates it being purely a talent acquisition.
Zynga launches CSR Racing 2 worldwide. A game developed by NaturalMotion for mobile platforms.
Zynga launches new mobile action strategy game developed by acquisition NaturalMotion.
Zynga likes to keep their upcoming developments under wraps, so it's difficult to tell in what direction they're headed in next. Either way, it's going to be an interesting few years for the game developer.
Before Zynga became the gaming giant it is today, Zynga's CEO Mark Pincus had to endure several false starts and detours along the way. Pincus had already three failed companies on his resume before he decided to step into the gaming arena. This opportunity came about in May 2007, when Facebook began letting developers create applications on its social network using its API. This was obviously a bid to beat MySpace, one which succeeded since developers started gravitating to the thriving company.
Among them was Pincus, who set up a company called Presidio Media just a month earlier in order to hitch a ride on what was clearly the next big thing in social networking. This was a risky bet he was playing since this early successes in gaming was on MySpace, where he was making most of the revenue. Yet, Pincus realised that Facebook was onto something better and banked on this intuition to focus his energies on developing applications for this social network.
In July 2007, Pincus rebranded his new company, calling it Zynga after his late American bulldog which appears in silhouette as the company's logo. The company was growing fast but it had yet to test the waters on Facebook where Zynga would find its later fortunes. When Zynga released their first game for Facebook, a poker game which was initially known as Texas Hold'em Poker and would later evolve into Zynga Poker, it was so successful that it made the company immediately profitable. The stage was set for the rapid growth that would ensue.
Aiming for the top spot
Zynga's method of creating games was unlike that used by other companies, such as rivals Playfish and Playdom with which they jostled for top spot in the early gaming charts on Facebook. Pincus was determined to develop games in the same manner that other software was being developed.
Using techniques inspired from the popular agile methodologies of software development, he sought to test new game ideas as quickly and as cheaply as possible to find out what would work and what wouldn't. Zynga was very reliant on this kind of data and Pincus willingness to scrap games that didn't return encouraging results was a major part of what propelled the company to its current position in the social gaming market. Although Pincus figures prominently in the company's history, he wasn't the sole architect of Zynga's fortunes.
Throughout its early years, many people played a critical role in Zynga's growth, including Facebook COO Owen Van Natta, and experienced game designers such as Mark Skaggs and Brian Reynolds who crafted innovative and addictive games that were simply a cut above the cheaper clones that it used to churn out before. What stands up in Zynga's growth is its consistent drive to create games that can be accessed and enjoyed anywhere and at any time.
The team behind its smash hits was firmly guided by the company's beliefs that games should be free, social and most of all fun to play. The convergence of these three factors was where Zynga excels and where many of their early competitors, still intent on churning out clones, failed miserably at.
The early years
Zynga launched its second game, Mafia Wars, in 2008. At around the same time it bought another game called YoVille, a social network game that was based in a large virtual world and which would form the basis of its best-known game, FarmVille. Before growing crops and caring for farm animals became all the rage, Zynga could already boast of being Facebook's top app developer with around 40 million active users that played its games every month.
In June 2009, Zynga shot to stardom when it released it best-known title. FarmVille became the largest game on Facebook, attracting over 10 million users that were actively engaging with the game every day in only six weeks. These numbers continued soaring when Zynga released a sequel FarmVille 2 and a spin-off called ChefVille .
Thanks to these offerings, Zynga continued strengthening its grip on the social gaming market with over 265 million active users per month and occupying the top three spots of the top five Facebook games at the moment. Although the page had definitely turned for Pincus, working under Facebook's shadow was proving to be too much to bear. The social network could dictate the rules that developers on API had to follow and Zynga simply wouldn't have that.
FarmVille became the company's first stand-alone game and in March 2013, Zynga formally ended its relationship with Facebook even though it was estimated that around 80% of Zynga's earnings came from Facebook users.
Zynga goes to 157 employees and hits revenues of $19.4 million with a loss of $22.1 million.
Zynga revenues hit $121 million with net losses of $53 million. 576 employees at the end of the year.
Zynga grows to over 1,200 employees.
Zynga revenues hit $597 million and acquires Newtoy. Also launches CityVille which outgrows FarmVille with over 58 million users.
Zynga tops 206 million monthly active users and doubles its employees to 2,500.
Moving into real-money gaming
Although Pincus' bet to stake his company's future on Facebook paid off handsomely and Zynga was busy experimenting with ever more complex games like Empires & Allies while its stock was being traded on NASDAQ, more innovations were afoot. Thanks to its obsessive collection of data, Zynga was in a good position to know exactly what users liked from social games and it wanted to monetise this winning formula even further.
Their revenue was mainly collected from sponsorships and ads that Facebook displayed in the game. Zynga had already managed to prove to the world that free-to-play games were a viable business model thanks to the methods mentioned above, but now it sought to take it a step further by convincing users to exchange real money for virtual goods that could be used in a game. Initially, this was done indirectly by 'lead generation', i.e. inviting users to sign up for and share revenue-generating offers in exchange for virtual poker chips.
A new game: money in exchange for data
In 2007, selling virtual goods was still a radical thing to propose, but Zynga was confident enough that they could develop this in a real business model. Although it would still create free-to-play games, users would be able to make purchases that would enhance their gaming experience.
When ad revenues starting drying up and subscription models were out of favour, Zynga began asking its users to start paying for virtual currency, the poker chips they used to play Zynga Poker, and perks such as VIP status which unlocked certain bonuses in the game. The social aspect of gaming and the addictive gameplay that Zynga apps provided were a big draw for players and even though only 2.5% of Zynga's active users paid for virtual goods, this small group of hardcore games would be enough to make the company profitable and fuel further growth.
The main benefit of this system was that there was no limit to what users could pay and some users really took their games seriously! Zynga could sell packages of virtual poker chips at $100 each and, surely enough, there would be a player ready to fork out that cash. Although some people were turned off by Zynga's decision to introduce in-game purchases, the cost of getting new users was very efficient and the losses were largely offset by new users installing Zynga's apps on their mobile devices.
Since its founding in 2007 and through all its ups and downs, Zynga has clearly fulfilled its mission of 'connecting the world through games'. As of December 2013, the Zynga line-up consists of 11 Facebook games and 17 titles that can be installed on iPhone, iPad and Android mobile devices.
Many commentators have started questioning the long-term validity of Zynga's approach to social gaming, especially its ability to keep generating fresh and innovative gaming ideas. However, Zynga has permanently changed the face of social networking gaming. It has introduced a completely new style of play to millions of casual gamers worldwide and gave game developers a new business model to aspire to and improve.