Zynga Files for $1B IPO
forbes.com
forbes.com
*disclaimer: I'm not nor have I ever been in SV.
I'd ask this question to the developers at CarrierIQ though....those guys should be ashamed.
Edited to add: No, no one seems anymore ashamed to work at Zynga than one does at any game company.
http://insertcredit.com/2011/09/22/who-killed-videogames-a-g...
And HN discussion of above: http://news.ycombinator.com/item?id=3114239
Although yes, working for cIQ is worse, and working for BAE is much worse still.
I guess cIQ represents a greater potential for malpractice. I know pretty much exactly what happens at zynga, and while I don't like it, its no worse than many other unhappy commercial practices.
What happens with the cIQ data is hidden from our view, and there is great potential for really bad stuff. However, like you say, it's a closed box. It could all be utterly innocent. Somehow though, I doubt it.
Actually directly handmaking bombs to drop on pakistani kids is definitely more evil than making shit games.
The High Holy developers sit around thinking up ways of manipulating people into addiction. The developers and management get positive social reinforcement from co-workers and the board when they find another hook into people's brains ("Your character will DIE unless you come back RIGHT NOW!" "You haven't visited in 18 hours, VISIT NOW FOR FREE GIFT!").
Reinforcing shady practices of individuals ("It's not unethical, it's funethical!") over time makes developers and management banish any thought of wrongdoing. Users are just an abstract ID anyway -- an abstract ID with access to a credit card. If someone wants to spend $10,000 per day buying purple carrot pixels, why shouldn't we milk them dry?
You've never worked at Zynga, so to purport that you know exactly what it's like to work there is bullshit.
Your comment reflects exactly what Silicon Valley nerds think of Zynga externally. They think that Zynga is nothing but people refining skinner boxes for people to play in. You've probably seen one or two talks of Mark Pincus talking about "doing every dirty trick in the book" or something like that. Have you ever met him? Do you even know the last time he worked directly on a game? You're allowed to have whatever opinion you like, but this opinion is bullshit.
Your entire comment is ridiculously biased and unreflective of Zynga internally or externally.
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So yes, JonnieCache, there is a stigma for working at these companies. reflected by the parent comment. Is that stigma justified? Absolutely not. There are plenty of other reasons not to like developing at Zynga most people don't talk about:
* Zynga is not a technology company first. This means that product & revenue decisions are always prioritized over innovating tech. Most developers aren't comfortable with companies like that.
* Zynga isn't accepted as a legit member of "games companies" circles. You can't tell your buddy who works building a PC MMO or console FPS that you're in games because you work at Zynga. You'll get laughed out of the room.
* Developers are not decision makers at Zynga. Product managers and game designers call all the shots. So if you're writing code, you're not really "making games" in the traditional sense, you're just implementing someone else's spec.
So is Zynga the best place for a dev to work in the valley? It isn't the worst. You'll make more money and get more perks than you would working at a startup, but it won't be personally fulfilling. Do you spend all day scheming ways to exploit people? Fuck no, get over it already.
This is true, but a bit misleading. As an engineer at Zynga, you spend your time developing to spec, not scheming. The game designers are the ones that actually spend all day scheming ways to exploit people.
I think the stigma mostly comes from the fact that so many of Zynga's users hate their products. It's not really because of the engineering talent there, it's just how the organization works, but still, it's a stigma that makes sense.
The personal attack is hilarious. Mike Sego is a good friend and to think that I would outright copy his game is deplorable. When our product releases in the next few weeks, you'll see how different MinoMonsters is.
When will this "rip-off" meme finally die? It's entirely absurd and usually reeks of sour grapes.
As a developer I certainly try to fight it. Day after day producers come up with a new game that follows the exact same formula of questing and doll housing and monetization and one day I would like to prove the BI numbers wrong with something refreshing.
Is that not true? Didn't Zynga make a huge portion of their early money from SMS fraud? The kind of money that gave them a huge leg up over their competitors?
In my opinion, Zynga is an indictment of capitalism itself (and I say this as someone who likes capitalism). It's lowest-common-denominator, race-to-the-bottom, zero-ethics type stuff. Not just their products, but the way employees are treated there. It's no surprise that most developers find it revolting and wish it would just die.
The reputation is: long hours, cut-throat environment, back-stabbing execs.
Just stating what I've heard.
As I can't edit it any longer, I'll clarify here: I was asking from an "I wonder if SV people have the balls to give the zynga lot flack for making those shitty games?" point of view, not an "I want to go and work for this company now it's worth $7B but I'm worried that nerds might be mean to me in bars" point of view.
Just for the record.
It's probably not outrageous per se, but it's certainly on the high side.
The main difference between D&B and Zynga is that Zynga is available to any one with a computer or smartphone, while D&B franchises are only built in cities of 500k+ people. That difference might create a multiplier on the order of 10. $600M * 10 = $6B. So $7B in valuation doesn't seem that ridiculous to me.
I think other game companies are a much closer match.
Existing game companies aren't directly comparable to Zynga precisely because they don't market to women. However, a social gaming environment like Dave & Buster's is comparable, because they target adults in their late 20s/early 30s and families, whose social agenda is driven by women.
Zynga's success comes from the fact that they tapped an underserved market: women who like to socialize through playing games.
In short: "Men spend an average of 31% more per transaction, or $15.60 versus $11.90," explains Flurry. "In fact, male spending dominates female spending across each age group by a relatively consistent margin. In the 'sweet spot' of revenue generation, 25 – 34 year olds, representing a whopping 49% of total revenue, men out-spend women by 37% per transaction."
Granted - these stats are for a different company, but I'd be surprised if they are markedly different for Zynga.
The study you linked is more recent, but such a massive swing in the other direction is probably not indicative of reality. Statistics reported by agencies are often interpreted incorrectly. The companies who run the survey are often biased and perform the tests incorrectly. I've been pitched statistics by marketers plenty of times and they usually don't know what they're talking about.
Nevertheless, your article goes to show that the spending gap between men and women in online social gaming is pretty small. My article mentions that women tend not to play console and PC games as much as men do, which supports the opinion that EA is not a good comparison point for Zynga.
I wish I could get male/female spending demographics for Dave & Buster's, but it would probably be closer to social gaming than console/PC gaming. Although you'd have a tough time teasing out money from men (husbands/boyfriends) who pay for their female companions vs. men on themselves.
Edit: Many years ago when I played Everquest some friends had a discussion of why so few women play games. One guy answered, quite aptly, "By putting scantily-clad big-breasted cartoon women and monsters bashing each other on the cover they catch the attention of men. If they wanted to bring more women in, then they should have smiling people sitting around a table and cooperating with one another."
7 Billion does not seem modest to me. Groupon's IPO was valued at a bit more (about 12.5 billion) and that seemed like a much more substantial business to me. And of course Groupon is not doing too hot right now.
I wish the best for the rank-and-file at Zynga, but I feel like the IPO is rushed, and that usually isn't a sign of success.
You may think Zynga is overvalued, but if so, I'd be curious to see you put that in the form of a quantitative argument.
http://techcrunch.com/2011/11/27/towerdefense/
They're spending more to market new titles:
http://articles.sfgate.com/2011-11-26/business/30446059_1_zy...
As a result of the above two factors alone, their net profit is shrinking fairly dramatically. This is very similar to Groupon (also "profitable" at the time of IPO), and you can see how they're doing for yourself, here: http://www.google.com/finance?q=GRPN (-25% since launch, in case you don't feel like clicking)
Using the 'it's profitable' logic would mean that investing in Beanie Babies Corp while they were making money hand-over-fist would've been the height of financial prudence.
Sure the VCs who have funded the company up to this point are going to make tons of money. But that's their model: stoke interest in a business, take profit, and get out.
OK, so you think it's worth less than $7B, but I suspect you also think it's worth more than $0. What do you think it's worth?
Due to their well-documented culture problems (I'm in games in SF, and only know one person who went to work there ... he's 24 and wanted to 'get rich' ... everyone else stays far, far away), and resulting inability to grow through acquisition, I'm not sure what they actually need an additional billion+ dollars for. To make new games, I suppose, but outside of Cityville and Words with Friends, they haven't been able to make the Farmville lightning strike at will.
All of these new titles cost money, and more money to market, and they're missing far more often than they're succeeding.
It just doesn't seem sustainable, to me.
I think the IPO is chance for the funds that invested hundreds of millions of dollars in the company to profit-grab, pure and simple.
If there are lots of successful, profitable tech companies that are not IPOing, then something else is wrong.
How do you IPO a business that doesn't... well... do anything? I've googled around and asked people I know who are into this kind of stuff, but I still don't get it.
I probably will get downvoted, but my question is legitimate.
[1]: Still don't have a Facebook account
unlike many well-loved companies with whom you're never quite sure how they make money or who their customer is, with zynga it is very clear what their revenue stream is and how they make money. as scummy as they are, i'd be much more confident investing in a zynga IPO than a twitter IPO.
Zynga has moved aggressively into mobile gaming and, from what I can tell, they're going to be successful there. If they stay strong there, their reliance on the FB platform will be less of an issue.
EA has a market cap of $7.68B so I see little issue with this market (granted, I no nothing of their specific financials so I can't comment on their valuation).
But she purchased the $1.99 mobile app and hasn't bought anything from Zynga since. She abhors Farmville and all Facebook games in general. She doesn't see the ads from the paid app. So where is the revenue in users like my wife?
Freemium games don't have some secret way of monetizing all users effectively, quite the contrary. They give the product away for free to increase exposure and a small subset of users with piles of disposable income or a high credit limit pay for everyone else, and that frequently results in making more than what they would make if they charged everyone some small fee.