Zynga Minicase

Topics: Facebook, Game, Question Pages: 2 (526 words) Published: April 3, 2013
Competitive situation facing Zynga
Let us first analyze the competitive situation facing Zynga by asking the question: Does Zynga really have any competitors right now? Taken in the narrowest possible sense of social gaming on Facebook, the answer is no. Zynga has more users than all of their nearest competitors, and more users than the rest of the top 10 developers on Facebook combined. Barring any massive systemic disruptions to the platform, Zynga's dominant position and the accompanying network effects are likely to ensure they stay there for years to come. Zynga's largest advantage is in their analytics and their game platform.  They have a vast user base to Alpha Beta test everything, including in-game copy, virtual goods, etc.  They have an analytics team that's able to analyze this data and extract user insights that they can then cross-pollinate across all of their games. A growing advantage is their ability to transfer users from one game to another.  It is no longer safe to assume that players will play one game consistently for 2 years.  Excellent social gaming companies will need to improve their ability to engage users with their new games as the users get tired of the games they have already been playing. It is clear that Zynga wants to be the #1 global player in this market. This is a formidable challenge - it means mastering the creation and distribution of games across a variety of platforms, devices and geographies, most of which Zynga does not dominate. Viewed from this angle, Zynga has many strong competitors.

Free to play publishers such as Nexon: They made close to $900m revenue during 2010, which is roughly 50% more than the $600m Zynga achieved in the same period. Crucially, they have far less platform risk - they own their distribution channels outright. Zynga is hugely vulnerable in this area.

Nexon is far from Zynga's only competitor in this league:
Shanda (Nasdaq: GAME) currently trades at a market cap of ~$2bn on...
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