Zynga Files IPO, Also Known as the Path to Billions

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Posted by patrickklepek (4533 posts) -
WHO'S HUNGRY?

There's a reason so many designers have put traditional games behind them, in favor of social games: there's piles and piles of cash to be had. Zynga, the developer behind Mafia Wars and FarmVille, is the biggest social juggernaut, and is poised to capitalize on its success.

The company has filed an IPO with the Securities and Exchange Commission today, with the hope of raising at a billion dollars.

IPO means a company is going public. Public means shareholders. Shareholders mean a company has to answer to the people who have invested in the company. It also means Zynga has a way to raise cash for expansion much, much faster.

"Dear potential Zynga shareholders, I’m proud and excited to be writing this letter to you today," said Zynga founder and CEO Mark Pincus in the documentation filed today. "Our strategy from the beginning has been to build the biggest macro bet on social gaming to provide our players with the most accessible, social and fun games. Despite our rapid growth, we have been careful to build for the long term. I’ve always thought of this journey as being a series of sprints that make up a marathon."

The biggest problem with any of the new business models is proving it out, by getting into the black and showing the pay-to-play model works. Zynga's financials show the company had a net incoming of $90.6 million in 2010, backed up by nearly one billion dollars in cash, as of this past March.

Staff
#1 Posted by patrickklepek (4533 posts) -
WHO'S HUNGRY?

There's a reason so many designers have put traditional games behind them, in favor of social games: there's piles and piles of cash to be had. Zynga, the developer behind Mafia Wars and FarmVille, is the biggest social juggernaut, and is poised to capitalize on its success.

The company has filed an IPO with the Securities and Exchange Commission today, with the hope of raising at a billion dollars.

IPO means a company is going public. Public means shareholders. Shareholders mean a company has to answer to the people who have invested in the company. It also means Zynga has a way to raise cash for expansion much, much faster.

"Dear potential Zynga shareholders, I’m proud and excited to be writing this letter to you today," said Zynga founder and CEO Mark Pincus in the documentation filed today. "Our strategy from the beginning has been to build the biggest macro bet on social gaming to provide our players with the most accessible, social and fun games. Despite our rapid growth, we have been careful to build for the long term. I’ve always thought of this journey as being a series of sprints that make up a marathon."

The biggest problem with any of the new business models is proving it out, by getting into the black and showing the pay-to-play model works. Zynga's financials show the company had a net incoming of $90.6 million in 2010, backed up by nearly one billion dollars in cash, as of this past March.

Staff
#2 Edited by FluxWaveZ (19334 posts) -

Better invest in Zynga stock now.

#3 Posted by barkertron (83 posts) -

Zynga make me mad...

#4 Posted by Jadeskye (4367 posts) -

so much money coming their way.

#5 Posted by FuzzYLemoN (1600 posts) -

I read that as "The makers of Farmville are going pubic."
And I giggled, because I am so immature.

#6 Edited by TheDudeOfGaming (6078 posts) -

 I hope Zynga and all the stockholders and all those who play Zynga games burn, slowly, in hell...for all eternity...
Edit:Too much?

#7 Posted by Siphillis (1292 posts) -
@TheDudeOfGaming said:
 I hope Zynga and all the stockholders and all those who play Zynga games burn, slowly, in hell...for all eternity... Edit:Too much?
Not enough.
#8 Edited by Blair (2505 posts) -

I heard plans for this some time ago and I could only shake my head. We are on the verge of another tech bubble bursting. This is ridiculous. I'm in finance and this is absolute insanity. Hold onto your money because the number of single-purpose, flavor of the week, flimsy-business-model IPOs have increased dramatically in the last couple of months. Things are going to get rough. If you can afford the assets to short; short.

#9 Posted by kollay (1929 posts) -

Has anyone tried those ice cream? Been wondering about it.

#11 Posted by synapse720 (40 posts) -

copy edit!

with the hope of raising at LEAST a billion dollars.

#12 Edited by mnzy (2914 posts) -

ChaChzynga!

#13 Posted by Bumpton (445 posts) -
@TheDudeOfGaming said:
 I hope Zynga and all the stockholders and all those who play Zynga games burn, slowly, in hell...for all eternity... Edit:Too much?

Umm, why? I don't like their games, but I haven't heard anything about them murdering children...
#14 Posted by bretthancock (778 posts) -

@Blair said:

I heard plans for this some time ago and I could only shake my head. We are on the verge of another tech bubble bursting. This is ridiculous. I'm in finance and this is absolute insanity. Hold onto your money because the number of single-purpose, flavor of the week, flimsy-business-model IPOs have increased dramatically in the last couple of months. Things are going to get rough. If you can afford the assets to short; short.

What he said, well put sir.

#15 Edited by Cubical (637 posts) -

I remeber when  7- 11 had good crap  like super mario bros the movie  big gulps slurpee cups with the deformed  jurassic park yoshi on them and darht vader and yoda crap.. 
 
 
http://farm4.static.flickr.com/3426/3385490637_be732e5286_b.jpg
 
7-11 you have lowered your standards for crap thanks for nothing fuck twats.

#16 Posted by crusader8463 (14422 posts) -

I hope this fad ends sooner rather then later. Really hate how long it;s going to take for video games to get back to us after all the casuals get tired and move on.

#17 Posted by Mr_Skeleton (5144 posts) -

Does the Farmville ice cream taste like shit?

#18 Posted by bbrcher (67 posts) -

Such hatred.

#19 Posted by Subjugation (4720 posts) -

Wonder if that Farmville ice cream tastes like dirt.

#20 Posted by TheKing (834 posts) -

UNJUSTIFIED ANGER!!!! Don't like it don't play it. Simple solution.

#21 Posted by Airickson (120 posts) -

@bbrcher said:

Such hatred.

Yeah. I kinda don't get it. I don't really care for that stuff either, but I don't see how it's deserving of such...attention. I mainly feel indifference (if that's actually a feeling).

#22 Posted by Brackynews (4082 posts) -

Buying Zynga shares means that Farmville players are making me money, so that I'm fine with.

#23 Posted by KoolAid (934 posts) -

If you fancy yourself someone who's knowable in most things games, here's a tip: Take a pro Zynga (or rather pro social game) stance. Close minded folks scurry away from the scary future, where as a wise duder embraces the market forces, so they can mold it into the future they want.

For as many negative aspects social games have, there are many, many more positives. Try to figure out what they are and you'll be the smartest guy in your forum!

At which point they will form into an angry mob and hang you.

#24 Posted by zombiesatemycereal (426 posts) -

@TheDudeOfGaming: no, keep going

#25 Posted by bbrcher (67 posts) -

@KoolAid: Too true, on both points.

#26 Posted by Aarduil (45 posts) -

Zynga sold out!!!... Oh wait

#27 Posted by aceofspudz (938 posts) -

My problem with Zynga isn't really about Zynga specifically, but about how they make me feel about humanity.

#28 Edited by Afroman269 (7387 posts) -

@Bumpton said:

@TheDudeOfGaming said:
I hope Zynga and all the stockholders and all those who play Zynga games burn, slowly, in hell...for all eternity... Edit:Too much?
Umm, why? I don't like their games, but I haven't heard anything about them murdering children...

Ya, I'm actually tempted to invest in them at the moment. Fuck that guy. I'm here to make money god damn it.

#29 Posted by Krakn3Dfx (2490 posts) -

Zynga is the future of gaming.

No, wait...

Zynga is The Future of Gaming.

No, hold on, I got it...

Zynga: Gaming Into The Future

#30 Posted by slantedwindows (272 posts) -

pandora, linkedin, zynga, groupon, facebook... there's a bubble a-brewin.

#31 Posted by Branthog (5562 posts) -

What a shock.

An IPO is what you do with your company when you don't give a fuck about it and just want quick cash. If you cared about your company, you would just be happy for it to be profitable, keep people employed, keep money rolling in, and improving what you do. If you just want fast money (which Zynga has long since made clear is their one and only objective), then you go down the path of "all that matters is the next quarter and getting our valuation higher than it was last quarter".

#32 Posted by RoyCampbell (1096 posts) -

Sadness.

#33 Posted by Khann (2850 posts) -

@KoolAid said:

If you fancy yourself someone who's knowable in most things games, here's a tip: Take a pro Zynga (or rather pro social game) stance. Close minded folks scurry away from the scary future, where as a wise duder embraces the market forces, so they can mold it into the future they want.

For as many negative aspects social games have, there are many, many more positives. Try to figure out what they are and you'll be the smartest guy in your forum!

At which point they will form into an angry mob and hang you.

Enlighten us of these wonderful things, oh wise one.

#34 Posted by tourgen (4493 posts) -

games that strip away everything but rat-hitting-the-feeder-bar "gameplay". No puzzles, no reflexes, no strategy, just "here's a cookie for clicking". Fucking disgusting and shameful manipulation and exploitation all for a marketing buck. Good work assholes.

#35 Posted by therealnelsk (277 posts) -

@Blair

Came here to say the same thing but you beat me to it, and I couldn't have said it better. Social networks are easily getting the billions of cheap dollars injected into the economy post-crisis, and it harkens to the days where the only prerequisite to getting massive venture funding was to have a .com in your company name.

Will be interesting to see where companies like Zynga and LinkedIn are in ten years, you'd think people would be going back to the fundamentals. Apparently that isn't the case...

#36 Posted by Brendan (7804 posts) -

People who care negatively about this need to take a hard look at their perspective. I don't care about Zynga's games at all, and plenty of games for me come out, so I just keep on living. Why hate on people who just want to play some simple social games? They're not hurting you or your games. It's like people hating on Top 40 music artists when they probably don't listen to the radio stations that they're on and mostly avoid their music with relative ease. Why do you care??

#37 Posted by Starfishhunter9 (369 posts) -
@Brendan said:

People who care negatively about this need to take a hard look at their perspective. I don't care about Zynga's games at all, and plenty of games for me come out, so I just keep on living. Why hate on people who just want to play some simple social games? They're not hurting you or your games. It's like people hating on Top 40 music artists when they probably don't listen to the radio stations that they're on and mostly avoid their music with relative ease. Why do you care??

It's cool to hate on what's popular/successful is my guess. Sort of tech Hipsters.
#38 Posted by KaosAngel (13765 posts) -

@Starfishhunter9 said:

It's cool to hate on what's popular/successful is my guess. Sort of tech Hipsters.

Their loss, I already invest money in Apple and few other companies. Zynga is gonna be riding high, and I shall invest in it as I watch the haters still bitch. Free money is free money.

#39 Posted by KaosAngel (13765 posts) -

@Branthog said:

What a shock.

An IPO is what you do with your company when you don't give a fuck about it and just want quick cash.

...uh, Google?

#40 Posted by KoolAid (934 posts) -

@Khann:

Well... a quick two pointer.

1: Zynga has opened up the gaming world to millions of people. This is not bad. Having tons of new causal gamers is not bad. It doesn't have to be some exclusive club. Maybe your casual gamer friends aren't playing what you want them to play right now, but think of it like a gateway drug to a more gamer friendly world.

2: The free to play model can actually allow designers to make some inspired design. Here's a secret, their goal is to get you to pay money. Here's another secret: every game company wants your money. The freeium model actually allows designers the ability to design games that engage you to the point that you want to pay because you feel engaged. Compare this to modern triple A titles, their plan is to advertise their game to you to the point that you feel comfortable risking your $60 for what may be a cool experience. With free to play, you usually always know what you are getting because you already played the game.

#41 Posted by Khann (2850 posts) -

@KoolAid said:

@Khann:

Well... a quick two pointer.

1: Zynga has opened up the gaming world to millions of people. This is not bad. Having tons of new causal gamers is not bad. It doesn't have to be some exclusive club. Maybe your casual gamer friends aren't playing what you want them to play right now, but think of it like a gateway drug to a more gamer friendly world.

2: The free to play model can actually allow designers to make some inspired design. Here's a secret, their goal is to get you to pay money. Here's another secret: every game company wants your money. The freeium model actually allows designers the ability to design games that engage you to the point that you want to pay because you feel engaged. Compare this to modern triple A titles, their plan is to advertise their game to you to the point that you feel comfortable risking your $60 for what may be a cool experience. With free to play, you usually always know what you are getting because you already played the game.

1) I disagree. All this "mass market" crap has done has caused games to be diluted ("streamlined") more and more. To me personally, this is not a good thing.

2) Free-to-play encourages developers to manipulate you as much as possible so you think your life would be better if you just spend a dollar on that XP boost. $5 on that pack of gold. $10 on a "mission pack" with "extra special loot rewards".

99.9% of the time it also means lower quality games. People see the "free" price tag and have no expectation of quality. And yet they still make a metric fuckton of money.

So, free-to-play encourages developers to make low quality games that are "free" because the "mass market" will eat that shit up and they will end up making more money than if they'd made something original and high quality.

Fuck Zynga and fuck free-to-play.

#42 Posted by Xpgamer7 (2382 posts) -

@Airickson said:

@bbrcher said:

Such hatred.

Yeah. I kinda don't get it. I don't really care for that stuff either, but I don't see how it's deserving of such...attention. I mainly feel indifference (if that's actually a feeling).

I agree, It's something I don't care about so I just ignore it.

#43 Edited by KaosAngel (13765 posts) -

@Khann said:

So, free-to-play encourages developers to make low quality games that are "free" because the "mass market" will eat that shit up and they will end up making more money than if they'd made something original and high quality.

Fuck Zynga and fuck free-to-play.

Buy more games new then, either pay the premium of 60 bucks a game or stop complaining. You aren't the focus group, it's the people who bring in the most money. Devs are making more cash out of iPhone games due to getting a straight 70% profit from every sale of App or in-game content. If you don't like it, buy more retail products.

People just bitching but fail to realize gaming is a business first. Hence why the vast majority of game companies are public...it's for profit. If that upsets you, buy indie games or buy games on launch day.

EDIT: You have to be an idiot to not buy Zynga stock on day one, it's the easiest money of the year for investors...hell it's the easiest money for investors since Netflix's big boon to the stockholders.

#44 Posted by Khann (2850 posts) -

@KaosAngel said:

@Khann said:

So, free-to-play encourages developers to make low quality games that are "free" because the "mass market" will eat that shit up and they will end up making more money than if they'd made something original and high quality.

Fuck Zynga and fuck free-to-play.

Buy more games new then, either pay the premium of 60 bucks a game or stop complaining. You aren't the focus group, it's the people who bring in the most money. Devs are making more cash out of iPhone games due to getting a straight 70% profit from every sale of App or in-game content. If you don't like it, buy more retail products.

People just bitching but fail to realize gaming is a business first. Hence why the vast majority of game companies are public...it's for profit. If that upsets you, buy indie games or buy games on launch day.

Where did I say I don't buy games new?

Most iPhone games are complete shovelware crap. You're saying that's a good thing?

Forget about the money for a second. Forget about companies squeezing every million they can out of us mindless consumers. How is anything in this industry right now heading in the right direction? Where do you expect it to be in 10 years? Do you think this "milk the fuck out of everything" approach is sustainable? Is it a good thing if it is?

#45 Posted by KoolAid (934 posts) -

@Khann:

You're missing the point. Traditional games just want you to buy that game. That's it, one payment. It's like how it doesn't matter if a movies good, as long as they get you to pay for the ticket and find out. Subscription or freemium games want to crate long term users so they can draw in the most cash. (ps You may not like clicking cows, but some people do. ) What's important here is the potential for a equally beneficial developer-player interaction. I mean, I just bought Alice Maddess returns... now I'm stuck with it. But I've already reached my potential as a user, so they did a "good job".

Also, is the gaming hobby really so terrible for you right now? Have you really been having an awful time since Zynga hit the scene? I feel like triple A's about to be better then ever.

#46 Edited by KaosAngel (13765 posts) -

@Khann: It doesn't matter because companies only want money. If you want better games, then start buying those games at launch and don't buy used games anymore. There's 40+ million in PS3s/360s...so get crackin' on those 20+ million units sold at retail.

I'm a man who likes profit, get profit anyway you can. That's how business works. The industry has been told no one cares about retail anymore and people don't want to spend 40 bucks on a handheld game. That's the consumer's fault for not buying 40 dollar handheld games. Even the GB staff said there will be no next-gen handhelds after the 3DS and PSV.

The average profit for an iPhone game is at least $100,000, at the bare minium...who the hell would turn that down? Hell, AngryBirds made $21,000,000 in PURE CASH, how many handheld games can do that outside of Nintendo, Capcom, Kojima, or Nomura.

No idiot would develop a $40 handheld game when he could make a quick million in pure cash. The industry is changing, if you don't like it...buy indie games in the hopes they make what you want.

#47 Posted by KoolAid (934 posts) -

@KaosAngel said:

The average profit for an iPhone game is at least $100,000, at the bare minium...who the hell would turn that down? Hell, AngryBirds made $21,000,000 in PURE CASH, how many handheld games can do that outside of Nintendo, Capcom, Kojima, or Nomura.

As someone who has a game on the top 25 list, I can attest to that ;)

I'd also like to point out that I enjoy a relatively lax work life where I get to do what I love. When I hear stories about LA Noire and other triple A titles and their terrible work conditions, I'm pretty happy I work on "complete shovelware crap" as it was called.

#48 Posted by Khann (2850 posts) -

@KaosAngel said:

@Khann: It doesn't matter because companies only want money. If you want better games, then start buying those games at launch and don't buy used games anymore. There's 40+ million in PS3s/360s...so get crackin' on those 20+ million units sold at retail.

I don't get why you keep suggesting I buy used and never new. I don't buy used games. Infact, I very rarely buy games at all any more because I like to "vote with my wallet". That's right, the hobby I once loved is pretty much dead to me, with very few exceptions. That, to me, is a bummer.

I'm a man who likes profit, get profit anyway you can. That's how business works. The industry has been told no one cares about retail anymore and people don't want to spend 40 bucks on a handheld game. That's the consumer's fault for not buying 40 dollar handheld games. Even the GB staff said there will be no next-gen handhelds after the 3DS and PSV.

It's the consumers fault for being ass-raped by publishers and not feeling like they're getting their moneys worth?

The average profit for an iPhone game is at least $100,000, at the bare minium...who the hell would turn that down? Hell, AngryBirds made $21,000,000 in PURE CASH, how many handheld games can do that outside of Nintendo, Capcom, Kojima, or Nomura.

Angry Birds is one of very few exceptions. Got any sources to back up your "100k average" claim? If I had to guess, I'd say that was complete and utter shit.

No idiot would develop a $40 handheld game when he could make a quick million in pure cash. The industry is changing, if you don't like it...buy indie games in the hopes they make what you want.

So someone with morals and a love for their craft is an idiot? Maybe that is the extremely sad truth of the world we now live in.

I don't like it... and the games I do buy are often only indie games. Indie games made by indies not because they want to make millions, but because they love video games and they want to explore creative and new ideas. Indies who view the money as a bonus - something to keep them fed while they continue to do what they love.

#49 Posted by Khann (2850 posts) -

@KoolAid said:

@KaosAngel said:

The average profit for an iPhone game is at least $100,000, at the bare minium...who the hell would turn that down? Hell, AngryBirds made $21,000,000 in PURE CASH, how many handheld games can do that outside of Nintendo, Capcom, Kojima, or Nomura.

As someone who has a game on the top 25 list, I can attest to that ;)

I'd also like to point out that I enjoy a relatively lax work life where I get to do what I love. When I hear stories about LA Noire and other triple A titles and their terrible work conditions, I'm pretty happy I work on "complete shovelware crap" as it was called.

And how many games make it on the top 25 list? That's awesome that you have made a decent living doing what you love.. but how many can say the same?

And can you honestly tell me, with a straight face, that the majority of the games on the iPhone/iPad are high quality experiences?

#50 Posted by KoolAid (934 posts) -

I've made games that work and games that didn't. The difference was a combination of business and design. I know a lot more know now then when I started. If I had the time to revamp the failures, honestly, the changes I would make would be to add social features and to add micro - transactions. And that would make the games both excellent and profitable. I doubt you'd take my word for it, but it's true. If you are the gamer you claim to be, I think you'd love em.


@Khann
said:

I don't like it... and the games I do buy are often only indie games. Indie games made by indies not because they want to make millions, but because they love video games and they want to explore creative and new ideas. Indies who view the money as a bonus - something to keep them fed while they continue to do what they love.

Full Circle! This just brings us back to my first point. You see, in this wonderful world, these indy games exist, just as the facebook games do! There's room for both! More people playing games = more markets = more varied gaming experiences. More people playing games in not a bad thing.

It's games for everyone!

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