Tuesday, November 29, 2011

Zynga employee relations to affect the company?


For those of you not in the know, Zynga is the maker of Farmville and Mafia Wars games on Facebook and as a standalone app. Earlier this year it applied to IPO. Roadshows should start soon. However publicity over its treatment of its employees are coming to light and not in a good way. 


Its reputation could've possibly affected potential acqusitions of Popcap, which it offered $950M in cash, and Angry Birds maker, Rovio, for $2.5B. Both turned down offers. 

see:


Zynga to employees: Give back our stock or you'll be fired


Current implied valuations on Sharepost stand at $12.9B, as of Nov 29, 2011. 2011Q1 earnings hit $12M with full year revenues believed to be above $1B

see:

Zynga road show kicks off next week: sources




Games are for free, but die-hards called whales (named after their casino counterparts), will spend money to gain that edge over others. It was estimated that 1% of Zynga's players account for 25-50% of its revenue.  It's the new revenue model for the free video game business model. Businessweek highlighted a customer who spent $500 in Farmville and a competitor to Zynga claiming it had 200 people who spent more than $10,000 per year on their games. 

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