Analysis: Where does Mattrick appointment leave Zynga's RMG ambitions?
Could Xbox chief's arrival signal a shift in focus?
In Zynga’s release accompanying the appointment of Don Mattrick as its new chief executive, we have to read through more than 1,000 words before finding any mention of its social casino product.
Farmville makes its first appearance in the second paragraph, as does Words With Friends, while Mattrick’s various non-gambling experience with Microsoft also naturally takes pride of place. Yet Texas Hold’em Poker, the most-played social casino title on Facebook and one of the top five apps on the social network altogether, is only mentioned within the context of the additional notes on Zynga’s wider portfolio. Furthermore its real-money offering “ launched earlier this year “ receives no mention whatsoever.
When Zynga launched its IPO in December 2011, talk of an imminent real-money launch was already brewing, and this only intensified as the share price began to drop. But does the appointment of Mattrick indicate the firm’s next move will be a step in an entirely different direction?
When one considers the on-off IPO discussion surrounding King, number two to Zynga in the Facebook stakes but a company with a greater focus on casual games such as Candy Crush Saga, and Zynga falling behind the curve on mobile there is certainly a case for not diverting resources to real-money gaming.
There is no doubting Mattrick’s credentials. Named one of Fortune magazine’s “Smartest People in Tech 2011,” his years at Microsoft and Electronic Arts “ among other roles “ have seen the 49-year-old involved in the development of world-renowned brands and innovations. Zynga board member Jeffrey Katzenberg described the appointment as a “spectacular coup” for the company, and he is clearly a man with a strong vision for online gaming.
With founder and outgoing CEO Mark Pincus set to remain involved with the company as chairman and chief product officer, there is reason to believe the change at the top is not an attempt to draw a line under Zynga’s past. However it remains to be seen how Mattrick’s specific expertise can be applied to not only the vastly recognisable social casino offering, but also a less visible real-money gambling project.
It is of course too early to pass judgement on the performance of Zynga’s real-money casino and poker offering, launched in April following a high-profile deal with bwin.party, but the UK-only proposition is unlikely to be significantly revenue enchancing. And any expansion into new territories is largely dependent on a slow-moving regulatory progress. It’s also worth noting Zygna’s social casino business is suffering some serious competitive pressure right now.
A recently published study from Eilers Research showed Zynga has been overtaken by Playtika parent Caesars Interactive Entertainment as the largest social casino publisher by revenue, even if it dwarfs its fellow US-based firm in the MAU and DAU stakes. The Q2 2013 figures estimate the San Francisco firm’s social casino market share at 15%, which, while still far from insignificant, is barely half the share of the market held by Zynga in Q1.
What’s more, the report attributes the industry’s sequential growth to the rise of mobile, up an estimated 10% quarter-on-quarter as revenues from Facebook activity fell industry-wide as monetisation rates improved. Zynga’s estimated $11m in mobile social casino revenues puts it third behind CIE and Big Fish, with the fast-growing Cervo-Media not far behind.
That is not to say progress has not been made in expanding the reach of Zynga’s social casino and other games in the meantime. Spooky Cool Labs was acquired last month in a move which chief revenue officer Barry Cottle said will help Zynga deliver “the most engaging and fun casino games”, while Texas Hold’em Poker is joining the likes of CityVille, CastleVille and FarmVille 2 among the titles set to come pre-installed on Acer laptops.
The appointment of Mattrick suggests Zynga is not ready to take a backseat as its rivals grow, but only time will tell whether his arrival is indicative of a change of focus.