What Zynga's Big Announcements Mean For Its IPO
Zynga's first-ever press event and slew of announcements weren't just a natural step in the company's ongoing growth — they were strategically timed to boost the company ahead of its IPO.
When the social gaming giant filed its S-1 on July 1, it disclosed a massive list of serious risk factors, which today's announcements help tackle.
Zynga's Risk Factor: "If we are unable to maintain a good relationship with Facebook, our business will suffer.
Announcement: Zynga Direct — "Project Z"
There's no question that Zynga is heavily reliant on Facebook for nearly all of its revenue. Today, the announcement of "Zynga Direct," a destination just for gaming that bypasses Facebook, should help with that.
Zynga Direct is a standalone gaming platform build on top of Facebook Connect, so it integrates users friends and enables them to move seamlessly between Facebook's and Zynga's new platform.
But perhaps most important, it establishes Zynga as the go-to destination for social gaming rather than having Zynga games live on the social platform.
It hasn't launched yet, so it's too soon to see whether consumers can be trained to go directly to the new platform when they're ready to play, but it seems promising.
Zynga's Risk Factor: "A small number of games have generated a majority of our revenue."
Announcement: 10 new games, including CastleVille, Zynga Casino and DreamZoo
What better way to reduce reliance on a few hit games than announce a slew of new ones with wide demographic appeal, from Zynga Casino, to DreamZoo, to Mafia Wars 2.
And five of the new games are designed for mobile play, built on Facebook's new mobile platform. This should allow the games to better compete with the likes of Angry Birds — offering a certain kind of distraction for gamers no the go.
Zynga's Risk Factor: "We rely on a small percentage of our players for nearly all our revenue."
Announcement: Games designed for five to 10 minutes of play.
Zynga wants to not just draw new players but a new type of player who has less time to invest in games.
CEO Mark Pincus says the company is working hard to offer games, like "Hidden Chronicles," which are more satisfying in a shorter amount of time, designed to offer a satisfying gaming experience in just five or ten minutes.
Today's announcement puts Zynga in a stronger position against its competition while laying groundwork to become less reliant on Facebook.
Now we'll have to see what investors think when the company finally starts trading, which is expected to happen next month.