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Comment by potatolicious | Hacker News Reader

I think it's simpler than that.

Fundamentally, Zynga's business model and products did not line up with the interests of either its host platform (Facebook) or its end users. Its revenue model was also, at its core, coercive and failed to provide real value to its customers.

All of the points listed in the article, while accurate, are IMO only symptoms/manifestations of this very core failing. This is also the general case that we can learn from - short of having a government-granted monopoly, if you fail to provide real value to your customers, you will fail.

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There is an interesting parallel to the Zynga model and before you think I'm being too extreme, consider my opinion nihilistic in the sense that I don't believe Zynga is or has ever been Evil.

Zynga was a casino. The games offered no real value to their consumers but neither do casinos. The only reason why you continue to play and pay for in game purchases is to get back the high of doing something well; you want to feel the rush of winning.

Their main fault wasn't that they did this, it was that they couldn't do it well enough. Addiction's downside is that gains are subjected to the law of diminishing returns. Basically, that your happiness is logarithmic. In a casino, they've overcome this logarithmic challenge naturally, by allowing you to put in an infinite amount of money. The gains are still logarithmic, hence why people can go from gambling $20 to losing their house in short order but Zynga could never figure out how to replicate this in their casino.

I think this wont be the last time we see this model in gaming, but the next business will first need to solve this problem: if you make money through addiction simulated behavior, how do you overcome the log returns associated with it?

What does provide real value?

I am sure it sounds like nitpicking, but arguments that hinge on an idea of real value are inescapably about a moral judgement of some kind.

It hardly matters whether you are cursing the rise of manufacturing in contrast to agriculture, or complaining about the growing portion of wealth and prosperity coming from the service sector.

Does the distinction draw a line between Zynga and other games, or between games and other entertainment. Where do professional sports fit in the hierarchy of products with virtue? How about art?

I think GP is getting somewhere with the idea about innovation and extraction, and maintaining focus on the utility players derive as an imperative before any extraction can be done. However, it is very easy to get off track venturing into vague notions about real or fake value. If users enjoy playing the games then theentertainment is offering value no more imaginary than any other.

Real value is whatever your customers are looking for. In this case, presumably, fun entertainment.

Zynga was more concerned with setting up an addiction loop and reaching into your wallet than building anything that lived up to its value proposition: creating fun entertainment.

It even fails the main value proposition as a casino - the winnings aren't worth anything.

But how is zynga less fun than a slot machine? Zynga isn't locking people in, they just tap into their brains. Which is what "fun" does. To say it is worth less than a high stakes pac man tournamnt is a moral judgment and gets into touchy questions of free will

I spent a number of years of my youth in Las Vegas and I think that between this 'Casino' comment and potalicious' comment you've captured a lot what looks like the core issue to me.

Slot machines (especially electronic ones) are fascinating in their ability to have their payout 'tuned'. And slots typically pay out 98 - 99% of the money they take in. But what is also true is that there is a sharp 'knee' in the curve between where people sit and play slot machines for hours, and where they leave immediately after they lose their money.

The weird not immediately obvious thing, is that slots that let you 'win' a lot encourage play. When someone is sitting there and 'winning' and up 50% on their night, and then lose back to being 50% down will keep playing to 'get back' to that winning state. But people who just win enough to slow their exhaustion of cash stop when they run out. They never had a time when they felt like they were 'ahead' they just watched their cash get smaller and smaller.

New Casino owners who would get scared about big slot payouts would worry, "What if everyone takes their winnings and just leaves?" which is a legitimate worry, but you have to believe the statistics are legit and the payout is 98%, not 100+%. As it turns out those winners brag which brings in more people. And as Steve Wynn once said, "Slots make money on the quantity of the players not the quality." Meaning that the more money that goes through them the more his cut of the output.

Zynga appears focused early on revenue generation per player but not as function of all players it seemed, rather as a function of single players. By tuning the production of individuals through gameplay tweaks the over all experience is compromised such that they recognize they are being exploited and that takes away the 'fun' part of playing. At some level everyone knows they are funding Zynga (or a Casino) but they do it willingly because its 'fun'. A very fine line be 'fun' and 'not fun' when the value goes down.

If Zynga could recruit Pichette away from Google it would probably help their bottom line tremendously.

Great discussion. It's really hard to get an objective discussion about Zynga around these parts.

Looking from personal experience with casinos, my gut instinct tells me they are definitely dangerous, but the one thing that tempts me to play is the cool factor around them. You think Zynga would do well to try and create an aura of coolness and sophistication around their upcoming games?

Vegas decorates casinos and creates movies and books with beautiful wealthy patrons. Zynga can't do that until virtual reality consumes us.

Are you aware that slot machines are netorkd and more like lottery tickets than dice? It would be impossible for a slot machine network to lose more than the tiny outlay if its first few payouts ever were jackpots.

> Addiction's downside is that gains are subjected to the law of diminishing returns.

100% nailed it. They stopped being able to develop hits that could keep up with the diminishing returns they were seeing on their old games.

I always thought that had Zynga just focused on keeping their slot machines shiny, accessible and easy to use, they wouldnt be in this mess. Instead they decided to reinvent the slot machine every year or so. It worked for a while but there's only so much you can do before you have to start outright copying. In other words, fight diminishing returns by continually improving the game rather than continually building new games.

The slot machine is constantly inventing and deploying new games as well, both in play style and art assets. You are fooling yourself if you think Zybga isn't staff with scholars of the slot machine industrym

> Fundamentally, Zynga's business model and products did not line up with the interests of either its host platform (Facebook) or its end users.

You left out: But it did line up with the interests of the investors, who then poisoned the well by bringing this POS public.

I don't think the public has anything to do with Zynga's failure. They've been losing mindshare and players since well before the IPO, and Facebook likewise has been closing the door on spammy app behavior since well before the IPO as well.

Zynga's failure is entirely its own doing.

I got semi addicted to Mafia Wars for about a week back in the day when newsfeed spamming was more wide open. I quickly realized that the game had no payoff and the company had no respect for its users. It felt scammy and dirty. When I later learned more about Pincus' loose ethics it started making more sense. Unfortunately Pincus is a very rich man which will encourage future assholes.

I think it's largely even simpler than you say:

They copied everything. They stopped even trying to think up a new idea.

I don't think copying is the main reason of failure. Probably if they copy WoW they would be more succesful.

$100s of millions (or more) were spent trying to copy WoW by many companies and almost everyone but blizzard failed miserably.

With a lot of them, though, the problem was that $100s of millions were being spent. MMO games--even niche ones--have guaranteed revenue; the problem has always been making a profit after incurring such high initial development costs. You fix this by making games for cheap--Korea is pushing cheap MMOs out by the dozens, and they're all turning tidy profits.

It wasn't the copying, it was the culture of AB split testing everything that killed them. AB (or multi-variate) testing can help improve an already successful product, but I'm not convinced it can build a good game from scratch (or from copy). A culture of design by AB split testing killed any chance they had at creating another breakthrough game.

Sending out emails to select users about possible future games, and counting click throughs as votes, with the idea of building the game with the most votes is probably doomed to failure. They double-downed on that strategy, brought in a bunch of MBA types (not evil people, but not great game designers either) to statistically manage game development. It can't be too surprising that great games aren't built that way, and a game company without great games can't survive forever.

The Steve Blank / Lean Startup fan club here would disagree with you.

Towing companies provide negative value to their paying customers, but seem to make a killing.

They provide value to the owners of the roads from which customers are towed - roads typically owned by the public. Your analogy is folly.

They make their money from the car owners, so who are their customers?

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