I know—stock talk at a Wall Street Journal conference? Impossible! (Maybe it’s me, or maybe it’s the fact that I am not allowed to invest in technology stocks, but I find technology stock talk to be a complete snooze. The products that regular people can buy and use are where it’s at.)
Anyway, I digress. Swisher and Pincus did end up talking about Zynga’s products and strategy. And while the company’s strategy in getting people to spend real money on putatively free games gives me the cold pricklies, you can’t deny its success.
On Facebook and on the Web, Zynga is a monster. Pincus says that there are three main drivers for his business: “Games becoming more free, accessible, and social.” And the web hits all three of those drivers, which is why Zynga makes a mint on FarmVille.
The problem is mobile. Which is not to say that Zynga isn’t embracing mobile apps. But its apps that are true mobile hits—Words With Friends being the best example—are the ones that “don’t monetize as well,” according to Pincus. Zynga’s mobile apps that are more like FarmVille, in that they’re free to play but with a whole lot more opportunities for Zynga to make money, aren’t as successful.
And of course, Zynga’s successful partnership with Facebook on the web doesn’t translate into the app universe, where Facebook’s app and Zynga’s apps are all their own little islands. It’s definitely a challenge for Zynga. And I can’t help but feel that some of Zynga’s games are hits despite themselves. Scramble With Friends isn’t a bad game, but it’s undermined by the fact that you can pay to get advantages over your opponent. (That’s true with Words With Friends to a certain extent, too.) I understand that it’s a page out of Zynga’s playbook, but I’m not sure it works in a competitive game environment versus a more social environment like FarmVille.
Another question Swisher had for Pincus was about the perception that Zynga is a company that, like a movie or TV studio, is reliant on hit properties. Pincus pointed out that Zynga’s got a bunch of different games with different profiles. The company runs the biggest online poker game on the planet, which is an evergreen game (and pending changes to online gambling laws, could become massively profitable). FarmVille, in contrast, is “more like a hobby.” And Zynga is very much focused on figuring out the right “content cadence” to extend the life of games by releasing additional content packs for its games.
I don’t doubt that Zynga is wired to be a giant moneymaking machine. But the sense I get from Pincus is that the company is much better at the FarmVille kind of game than the Words With Friends kind, and that it’s facing some serious challenges on mobile devices. As someone who likes mobile devices and prefers Words With Friends to FarmVille, I’m getting the sneaking suspicion that I’m not part of Zynga’s true audience.