Zynga in “unique position” to enter “very interesting” online gambling biz

TAGs: Zynga

zynga-earnings-online-gambling-positionZynga’s first quarterly earnings report since the social gaming developer went public in December saw Q4 revenues total $311.2m, a 59% bump over the same period in 2010. Online game revenue accounted for $283.9m (+51% from 2010) while advertising brought in $27.3m (+230%). Zynga titles Farmville, Mafia Wars and Poker accounted for 78% of revenues.

Despite the rosy numbers, costs associated with the IPO (including $510m in stock-based compensation issued to employees) resulted in a $435m net loss for the quarter. For the full year 2011, Zynga’s revenues were up 91% to $1.14b. Games accounted for the lion’s share ($1.07b, +85%) while ad revenue was up 226% to $74.5m. Looking ahead, Zynga is forecasting the second half of 2012 will grow faster than the first half.

Looking closer, Zynga’s daily active users rose 13% to 54m, while monthly active users rose 23% to 240m. Monthly unique user stats rose 38% to 153m. Monthly unique payers, a far more crucial stat in revenue terms, rose 13% to 2.6m. The number of paying users was 12.2m, roughly 5% of the total. Player conversion was 1.9%, up from 1.7% in Q3. Zynga owned the top-five social games chart, which included the company’s most recent release, Castleville.

Zynga’s mobile offering topped 15m in daily active users, a five-fold increase year on year and a gain of 2m in just the past month. Zynga released five new mobile games in Q4, and three Zynga titles – Dream Zoo, Words With Friends and Poker – placed in the top 10 iOS games for the quarter. On a conference call with investors, Zynga COO John Schappert said the company viewed mobile as “a big opportunity … as devices become more powerful, this is yet another canvas to grow.” Schappert also said progress was being made on Project Z, the standalone social network Zynga hopes will help decrease its dependence on Facebook. Project Z is currently in closed beta testing with no release date scheduled.

Project Z might be just the platform to assist Zynga’s desire to expand into real-money online gambling. According to Schappert: ”I think it’s actually a very interesting opportunity, because we’re in an unique position. We have the world’s largest online poker game and the most social online poker game we’ve been running for four years. We had record results last quarter. And it’s one of the top six games on Facebook. So I think we’re in a very good position and it’s a category that’s interesting to us.” The company has already launched Zynga Bingo, the first game to fall under its new Zynga Casino umbrella.

In other Zynga news, the company inked a deal with toymakers Hasbro to develop toys and games based on Zynga titles. Given Zynga CEO Mark Pincus’ alleged proclivity for duplicating what has gone before, we’re expecting a bunch of re-tooled GI Joes with the letter Z emblazoned across their chests. Probably why they didn’t sign a deal with Mattel, because Barbie’s ample assets would have rendered that letter completely illegible.


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