Zynga Inc. (Zynga) is a global leader in interactive entertainment.
The company develops, markets, and operates social games as live services played on mobile platforms (such as Apple’s iOS and Google’s Android), social networking platforms (such as Facebook and Snapchat), Personal Computers (PCs), consoles (such as Nintendo Switch) and other platforms. Generally, all of the company’s games are free to play; and it generates substantially all of its revenue through the sale of in-game virtual i...
Zynga Inc. (Zynga) is a global leader in interactive entertainment.
The company develops, markets, and operates social games as live services played on mobile platforms (such as Apple’s iOS and Google’s Android), social networking platforms (such as Facebook and Snapchat), Personal Computers (PCs), consoles (such as Nintendo Switch) and other platforms. Generally, all of the company’s games are free to play; and it generates substantially all of its revenue through the sale of in-game virtual items (online game revenue) and advertising services (advertising revenue). The company also operates a mobile programmatic advertising and monetization platform.
Established Portfolio of Social Games: The company operates a number of popular social games, including CSR Racing 2, Empires & Puzzles, FarmVille, Golf Rival, Merge Dragons!, Merge Magic!, Toon Blast, Toy Blast, Words With Friends, and Zynga Poker, as well as its Social Slots, Casual Cards and hyper-casual game portfolios.
Engaged and Global Community of Players: In the fourth quarter of 2021, the company had an average of 37 million Mobile DAUs (measure daily active users of its mobile games) and 184 million Mobile MAUs (monthly active users of its mobile games).
Scalable Technology and Data: The company leverages its technology to increase player engagement, including by continually enhancing existing games, and launching and acquiring new games to grow the Zynga portfolio.
Leading Portfolio of Social Games
The company’s strategy focuses on growing, creating and acquiring games that will stand the test of time and have the potential to engage players for years as enduring entertainment brands. The company’s portfolio of game franchises includes:
CSR Racing 2 – A visually stunning, fast-paced racing game allowing players to customize their collection of supercars and race against their friends.
Empires and Puzzles – A blend of approachable match-3 battles and deeper gameplay elements, including hero collection, base building and social alliances.
FarmVille – A franchise of games that deliver players an experience where they can invest in a world all their own and express themselves by building, expanding and nurturing their own virtual farm.
Golf Rival – A real-time player-versus-player golfing game, with multiplayer tournaments on spectacular courses with customizable equipment.
Harry Potter: Puzzles and Spells – A magical match-3 adventure brimming with the spells, humor, color and characters of the Harry Potter series.
Merge Dragons! – A puzzle adventure game where the company’s players can match and merge everything to produce artifacts and skills in furtherance of healing a magical land, harnessing the power of dragons and building their own camp to grow dragons.
Merge Magic! – A puzzle adventure game where players can lift the curse on mysterious new worlds and collect whimsical characters while solving fun puzzles and unlocking enchanting new surprises along the way.
Toon Blast – A level-based puzzle game where players create powerful combinations and progress through challenging obstacles as they travel through an immersive, magical cartoon world.
Toy Blast – A fascinating color-matching puzzle game where players eliminate toy blocks and test their skills through challenging levels.
Words With Friends – A word game featuring friendly competition that allows players to quickly connect with their friends and family, while also providing the opportunity to build relationships throughout the game experience.
Zynga Poker – An exciting card game that allows the company’s players to experience the thrill of the win as they compete against friends and family in one of their favorite casino card games.
Social Slots – A portfolio of slots games that deliver players authentic, Vegas-style mobile gameplay with a diverse mix of popular entertainment brands.
Casual Cards – A collection of classic single player and tournament style card games, including Solitaire, Gin, Spades and Okey with communities of skilled players.
Hyper-Casual – A portfolio of highly accessible games that offer instant gameplay and appeal to broad audiences globally. These games include breakout hits, such as Hair Challenge, High Heels and Tangle Master.
Network
At the core of Zynga’s live services platform is its first-party data network, which captures key insights about how its players are interacting with the company’s games. The company uses this data to deliver highly engaging interactive experiences for its players, optimize its user acquisition, monetize its games, and provides advertising services. In 2021, the company acquired Chartboost, Inc. (Chartboost), a leading mobile programmatic advertising and monetization platform. By leveraging the global scale of the company’s premium audience base, and the data generated from in-game actions, combined with Chartboost’s demand side platform (DSP), supply side platform (SSP) and mediation capabilities, the company has the ability to further optimize advertising yields and user acquisition. Within the company’s live services, it focuses on creating and supporting social networks within its games.
Revenues
The company primarily generates revenue from the following:
Virtual Items: The company’s primary revenue source is through the sale of in-game virtual currency that players use to buy virtual goods or through the sale of virtual goods directly (together, defined as virtual items). Virtual items can also be earned for free by the player through game play or by accepting promotional offers from the company’s advertising partners.
Consistent with the company’s free-to-play business model, a small portion of the company’s players have historically been payers. For example, in 2021, the company’s average Mobile MUPs (measure monthly unique payers in its mobile games) represented approximately 3.8% of its average Mobile MUUs (measure monthly unique users of its mobile games).
The company’s top three online game revenue-generating games historically have contributed to a significant portion of its revenue, though the games that represent its top three online game revenue-generating games vary over time. In 2021, the company’s top three online game revenue-generating games were Empires & Puzzles, Toon Blast and Merge Dragons!.
Advertising: The company’s advertising services offer creative ways for marketers and advertisers to reach and engages with its players while allowing continued operation of a free-to-play business model. The company’s advertising offerings include:
Mobile Advertisements in the company’s mobile games that include banner and interstitial advertisements;
Engagement Advertisements and Offers in which players can participate in watch-to-earn engagements or other offer engagements;
Branded Virtual Items and Sponsorships that integrate relevant advertising and messaging within game play; and
Advertising Network through which the company offers a unified advertising platform that includes a demand side platform and supply side platform, as well as mediation capabilities delivered through an SDK solution.
The company’s hyper-casual games and Words With Friends games accounted for 79% and 69% of its collective advertising and other revenue in 2021.
Marketing and Distribution
Agreements with Marketing Partners
The company builds a large community of players through the discovery of its apps in mobile platform app stores, the viral and social features built into the network effects of its games, as well as the cross-promotion of its games to its existing audience. The company also acquires its players through paid advertising channels. The company advertises its games primarily within other mobile applications and on social networks, often through in-app and other advertising partners, such as Facebook and Google.
Agreements with Apple and Google
The company’s revenue depends on its continued ability to publish its games on mobile platforms, primarily Apple’s iOS and Google’s Android. In 2021, the company derived 50% of its revenue and bookings through Apple and 46% of its revenue and 45% of its bookings through Google. The company’s use of mobile platforms and data derived from mobile platforms is governed by the standard terms of service of the mobile platforms.
Research and Development
The company’s research and development expenses were $545.9 million for the year ended year ended December 31, 2021.
Intellectual Property
The company pursues the registration of its domain names, copyrights, trademarks, patents and service marks in the U.S. and for some, in locations outside the U.S. The company’s registered trademarks in the U.S. include Zynga and the names of its games, among others.
Seasonality
Approximately 20% of the company’s revenue was derived from the advertising and other category in 2021. Advertising budgets are generally highest during the fourth quarter (year ended December 31, 2021) and decline significantly in the first quarter of the following year, which affects the revenue it derives from advertisements in its games. Additionally, the company generally experiences increases in game downloads and online game revenue in the fourth quarter and first quarter corresponding to increases in smartphone and tablet purchases during the holiday shopping season.
Competition
Developers for Mobile Games: The company’s competitors include Activision Blizzard, AppLovin, Aristocrat, DoubleU, Electronic Arts, Epic Games, ironSource, Moon Active, NetEase, Netmarble, Niantic, Nintendo Switch, Playrix, Playtika, SciPlay, Scopely, Tencent, Ubisoft, Voodoo SAS, and Take-Two Interactive Software, Inc., among others.
Other Game Developers and Platforms: The company’s competitors include Activision Blizzard, Electronic Arts, Epic Games, Microsoft, Nintendo Switch, Riot Games, Roblox, SEGA, Sony, Ubisoft, and Take-Two Interactive Software, Inc.
The company faces competition from online game developers and distributors who have primarily focused on specific international markets, such as NetEase, Netmarble and Tencent in Asia; and high-profile companies with significant online presences with new and expanded gaming offerings, such as Apple, Google, Microsoft, and Snap.
History
Zynga Inc. was founded in 2007.
