Zynga IPO expected this week
STEVE CHIOTAKIS: The maker of the online games Farmville and Mafia Wars is hoping to raise up to $2 billion from investors. Zynga will file paperwork today for an initial public offering that could value the company at as much as $20 billion.
John Moe is host of Marketplace Tech Report and he’s with us here. Hi John.
JOHN MOE: Hey Steve.
CHIOTAKIS: So $20 billion, huh? That’s the same it seems like as the two biggest video game makers combined. How’s that even possible?
MOE: Well, Steve, it’s like you say — let’s do the numbers. By last count, Zynga had 270 million people worldwide playing its games. That’s huge. And the games are kind of a refreshing change of pace from a lot of games out there. You don’t need to be a gamer. They’re easy to figure out. There are rewards within the game to stimulate that pleasure center and that’s always satisfying right there.
CHIOTAKIS: Zynga’s Farmville, John, is clearly — or could be — one of the biggest on Facebook right now. What happens when these other big companies start making rival games?
MOE: Well, of course they’re working on it. But here’s the thing. Zynga is really a social media company disguised as a game company. The games themselves aren’t much, they’re pretty crude really. But they encourage you to play with your friends and connect and get those friends started playing. Zynga has been able to really attract some top level executives in Silicon Valley who totally understand social media. That’s going to give them an advantage over game companies.
CHIOTAKIS: And how does Zynga make money John? How does it do it?
MOE: Well, it’s free and you can play it for years without paying a dime. All these games are, but you can upgrade and advance faster in the games if you make little purchases — $1 here, $1 there. And multiply that by 270 million users, it adds up in a hurry. And especially because they’re selling stuff that they don’t have to make. It’s not real, it’s imaginary. There’s no overhead, they’re selling pixie dust. And Steve the pixie dust market apparently is booming right now.
CHIOTAKIS: Booming right now. Marketplace’s Tech Report host John Moe. John thanks.
MOE: Thanks Steve.
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