Codebreaker

Zynga going public

John Moe Jun 29, 2011

The casual game maker is preparing for an IPO this week. That’s all the rage with tech companies these days after LinkedIn’s recent offering and the inevitable Facebook offering that will be huge enough to blow the earth off its axis and send it plummeting into the sun (status update: Hot in here!).

Things are going well at Zynga as money comes rolling in.

From the WSJ:

According to research from GreenCrest Capital LLC, Zynga is expected to see roughly $1.46 billion in revenue this year–roughly 80% of which will come from the sale of virtual goods in its games and credits, and about 20% from online advertising.

AppData, a third-party service that tracks the market share of Facebook apps, shows Zynga to be the largest developer by far on the platform, with nearly 272 million monthly average users. The next largest developer has only 34.3 million monthly average users.

Here’s the thing: Zynga sells NOTHING. It sells virtual goods, pixels, the appearance of things. It does not need to manufacture.

BUT! It’s not all rolling in money piles at Zynga HQ. That’s only a few hours a day. After that, everyone needs to get down to the business of coming up with the next game and IT HAD BETTER BE GOOD. Usage rates show that people grow tired of Zynga games like Farmville after a while and they let their crops go unharvested and their invisible cows starve to death. Zynga has a pretty good track record of coming up with new stuff but if it’s not fun the people will leave and the whole thing could collapse.

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