Can Zynga make a comeback?


The corporate logo of Zynga Inc, the social network game development company, is shown at its headquarters in San Francisco in this April 26, 2012 file photo. (ROBERT GALBRAITH/REUTERS)

Struggling social gaming company Zynga is looking to turn around its fortunes with a major shake-up at the top, luring the head of Microsoft’s Xbox team, Don Mattrick, to take over from founder Marc Pincus as chief executive.

Mattrick comes with one of the best resumes in the gaming business, having served as the lead executive for Microsoft’s Xbox team and also as Electronic Arts’ president of Worldwide Studios. He also has an impressive lineup of franchises to his name, including FIFA and The Sims, showing that he understands the kinds of gamers likely to fall into Zynga’s target audience.

It’s clear what Zynga sees in Mattrick. But what does Mattrick see in Zynga?

It has, after all, been tough for firm lately. Between notable game flops, flagging stock prices and Zynga’s decision last month to cut 18 percent of its workforce, the outlook for the social gaming company has been grim. As news about Mattrick’s appointment hit Monday, first reported by All Things Digital, the company’s stock rallied over 10 percent to an intraday high of $3.14 per share, less than a third of the $10 it asked when pricing shares for its initial public offering in 2011.

The decline comes after the firm’s several failed attempts to capture the success it had with earlier Facebook games such as Farmville, Mafia Wars and Cityville, particularly as Facebook users have begun using the social network’s mobile site more often. Attempts to jump into the app gaming world, most notably with the $200 million acquisition of “Draw Something” creator OMGPOP, haven’t panned out. In fact, Zynga laid off most of the studio’s employees in staff cuts last month.

Zynga has also struggled all along to stand as a strong brand on its own, rather than simply a company that makes Facebook games.

In a note to investors, Sterne Agee analyst Arvind Bhatia gave a harsh assessment of the firm, saying that Zynga’s issue “has not been so much a lack of leadership as its recent inability to produce hits, a general slowdown in the social gaming industry, increased competition, a difficult transition to mobile and a bloated cost-structure.”

With a newly lean staff in place, Mattrick may see this as a moment to start building a renewed Zynga that’s learned from its mistakes. The firm could benefit, for example, from more original games. It could also develop better ways of getting players to spend money on the micro-transactions that so often drive Zynga titles — spending some real money to get to your next reward is fine the first few times, but games that try that tactic too often cross quickly from addictive to annoying.

According to a report from Reuters, it seems Pincus is more than willing to let his successor take the reins. Mattrick was apparently personally recruited by Pincus, who remains the company's chief product officer, and the former Xbox head will have the final say over which games the company produces.

Meanwhile, Microsoft has yet to name a successor for Mattrick, who had recently become the company’s lightning rod as it fielded complaints from video gamers about its Xbox One console.

Mattrick has been the target of the most vehement criticism of Xbox One and signed his name to a post last month announcing that Microsoft, in response to consumer complaints, would revise its policies to allow game sharing on the Xbox One and would no longer require players to reconnect their consoles to the Internet once every 24 hours.

With Mattrick gone, the leadership duties for the Xbox team — for now — fall into the lap of chief executive Steve Ballmer as the firm prepares for a competitive holiday season in the console market against Sony’s PlayStation 4.

Related stories:

Xbox One: Microsoft updates policies on used games, Internet connection

Sony wins gamers’ goodwill in the console race

Sign up today to receive #thecircuit, a daily roundup of the latest tech policy news from Washington and how it is shaping business, entertainment and science.

Hayley Tsukayama covers consumer technology for The Washington Post.
Comments
Show Comments
Most Read Business