Zynga is a pioneer and innovator of social games and a leader in making gaming a core activity on the Internet. It believes its leadership position in social games is the result of its significant investment in its people, content, brand, technology and infrastructure.
Zynga has changed the ecosystem of the video games industry. The traditional video game ecosystem involved six key activities: Content providers, software developers, software publishers, platform providers, retailers, and consumers. Zynga opened a new space within this ecosystem. The company positioned itself as a social online game developer. It develops its own content and software, and offers the games online for free through platforms such as Facebook, its own website, Google plus and mobile phones operating systems (iOS and Android).
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Zynga - Strategic Analysis
1. Team members
Mateo Fadul Gonzalez
Rafael Navarro
Domenic Millen
Aman Mehra
Siriorn Vichaiwatanapanich
Nabeeha Qazi
2. • Company Overview
• Zynga’s Industry Position
• Revenue Composition
• Company Evolution
• Financial Analysis
• Strategy Analysis
• Zynga’s Future Prospects
Agenda
3. • Created in January 2007 and based in San Francisco, California
• The world’s leading provider of social game services
• Social Networks dependent (i.e. Facebook), also Mobile and Zynga.com
• Social games & internet gaming pioneer
• Leadership position: investment in their people, content, brand, technology
and infrastructure
• Connect the world through games
Overview
5. Zynga’s Industry Position
• Develops its own
content and software
• Offer games through
online & mobile
platforms
• Use of existing
infrastructure (PC &
social websites)
• Huge savings (+ Profit)
7. Revenue Stream
• Zynga top three games accounts for 55% of Revenues, of the remaining 45%, no single
accounts for more than 10%
55%
8. Timeline
Company
started
First sale of
virtual
goods
Aquisition
of YoVille
First 3rd
party in-
game
advertising
IPO Launched
Draw
Something
Real-
money
gambling
Expand API to increase
game penetration
Texas
Holdem
Expanded
virtual
goods
concept to
other
games
Facebook
notific-
ations
Large
rollout of
mobile
games
Large scale
in-game
advertising
Slashed
workforce
Application
program-
ming
interface
(API)
Expand real-money
gambling business
Launched
Farmville
Agreement
with
Facebook
signed
Facebook
credits
Agreement
with
Facebook
revised
Zynga with
Friends
2007 2008 2009 2010 2011 2012 2013 2014 2015
13. Financial Evaluation
ZNGA DNACF EA
Market Cap: 2.76B 3.43B 5.61B
Employees: 3,058 1,810 9,200
Revenue (ttm): 1.28B 2.45B 3.96B
Gross Margin (ttm): 73% 74% 64%
EBITDA (ttm): 54.00M 1.05B 393.00M
Operating Margin (ttm): -7% 40% 4%
Net Income (ttm): -209.45M 561.80M 175.00M
Net Profit Margin : -16% 23% 4%
EPS (ttm): -0.28 4.02 0.55
P/E (ttm): N/A 6.33 34.17
PEG (5 yr expected): -3.35 N/A 1.43
P/S (ttm): 2.16 1.39 1.41
Compare to 2 main competitors:
ZNGA = Zynga, Inc.
DNACF = DeNA Co., Ltd.
EA = Electronic Arts Inc.
14. Industry Future Prospects
Mobile games
becoming popular
Growing competition
from US & Intl. firms
Facebook opening up to more
game developers
Demand for sophisticated
games driving up costs
15. Zynga’s Future Prospects
Established customers
(players) base
Reduced dependence
on Facebook
Consistent innovator
Core mgt. team is not
the same
Reduced R&D expenses
Business integration
issues
18. DeNa Co., Ltd.
• Established in Tokyo in 1999
• A global internet company focused on social
games, e-commerce and other Web services
for mobile devices and PCs.
Sale by segment
At an industry level:Mobile gaming gaining popularityGrowing competition from US firms as well as international players like Tencent in ChinaSocial platforms like Facebook allowing more game developersDemand for sophisticated games driving up the costs
At company level:Established customers (players) baseReduced dependence on FacebookCore management team is no moreLitigation issues with EAIntegration issues that come with acquisitions
DeNA Co., Ltd. (pronounced “D-N-A”) is a global Internet company (TSE: 2432) focused on social games platform, social games, e-commerce and other Web services for mobile devices and PCs. Established in Tokyo in 1999 as a small startup with the launch of an online auction service, DeNA has continuously expanded its portfolio of growth engines.