Mark Pincus, co-founder and chief executive of Zynga, the social network gaming company most famous for creating FarmVille, says that “the web is like one big cocktail party.”
Zynga Game Network has aready reached the same levels of fame as its San Franciscan technology contemporaries Twitter and Facebook.
The company is now reportedly worth $5.5 billion just three years since launch, and has almost single-handedly revolutionised online gaming.
Mark Pincus, founder of Tribe Network, an early social network, and an early investor in both Facebook and Napster, is understandably excited about the company he co-founded in 2007 and named after his “rock star dog.”
“Since the likes of Napster, MySpace and Facebook were created, the web is a social place, with lots and lots of smaller cocktail parties happening everywhere,” Pincus said in his first major UK interview since the creation of Zynga.
“Beforehand, the web was a huge place that wasn’t connected in any way – and then Napster launched [and] the web suddenly lit up. The internet became this place where people could come together around their interests. And now I am hosting one of the biggest cocktail parties online.”
And he’s not joking about it. One of the first companies to take advantage of Facebook opening up its platform to developers in 2007, Zynga tapped into the highly lucrative market of social gaming and virtual goods three years ago.
33 million people around the world have now downloaded FarmVille, Zynga’s most popular game to date, and currently there are 60 million active players. A series of other games followed, such as CafeWorld, Mafia Wars and FrontierVille.
Zynga now has more than 320 million users, releases on average three major games a year, and is expanding its studio presence around the world at pace. As people live their lives increasingly online, they want to do everything with their friends in one place – which at the moment, with more than 500 million registered members, is Facebook.
“In 2007, people felt sorry for me. They asked me what I did for a living and I told them I was developing apps for Facebook,” he said.
“They asked me why, as an experienced technology entrepreneur, I was focusing my energies on something so menial, and how could I hope to build a business effectively on top of another business? But by the fall of 2007 we were profitable.”
Pincus has hired 850 people in the past year alone, bringing his workforce to a total in excess of 1,300.
Admittedly, Facebook still holds considerable power over Zynga, taking a 30pc share of each virtual credit bought by Zynga game players, and controls the platform upon which Zynga so heavily relies.
However, with no warning, Zynga, and other developers who followed its hot trail, changed Facebook’s business overnight, making it the largest games platform online.
So how does Pincus make their money? The answer is an enviable one to most businesses: through selling goods which don’t exist.
However, when asked whether he accepts it’s one of the best business models around Pincus smiles and then says, with seriousness: “When you go and see a movie, what do you leave with? Nothing physical – just the experience of the film. Well, this is the same.”
“It’s entertainment – people are buying into the game in a bid to be more entertained and have a better experience. It’s a business model that has been around for years. Zynga didn’t create it but we put it in a new marketplace.”
Zynga’s business model differs from Google’s one, according to Pincus. “Google makes money the faster a person leaves – ie the more they click on different adverts or links and go to the next one. I needed to figure out a way to make money from engagement as, typically, online companies have lost money by people being too engaged.
“Prior to social gaming, the online games business made its money from charging people to play, but once they had paid they played for ages – which ended up costing the businesses money the longer they stayed.”
“We were very attracted to the idea of what if you could provide enough value to our most engaged users to make them spend money? Which they do.”
So is it a problem that Zynga relies predominantly on one platform – Facebook – that it cannot control? Pincus does not think so. Other Silicon Valley executives say that no other Facebook developer could “pull a Zynga” now, as Facebook has changed its developers’ terms in such a way, post Pincus’s success, that it releases less control.
Zynga was able to promote its popular games, such as FarmVille, in clever ways on Facebook’s newsfeed –which is now no longer open to other developers, supposedly because Mark Zuckerberg woke up one day and found a huge success happening on his platform which he wasn’t in control of.
Pincus, as both a Facebook investor and one of its largest beneficiaries through Zynga, is predictably tight-lipped on this issue. He deflects it by talking about a new deal with Yahoo! which sees the company put some of its games across the technology company’s assets – such as its home page.
But interestingly, it has chosen not to put its most successful assets, such as FarmVille or FrontierVille anywhere other than with the mothership – Facebook.
The company has achieved a huge amount in a short space of time. So does Pincus want to sell up anytime soon, if persistent rumours are to be believed? “Zynga is not for sale,” he says.
“That is not my goal. I want to build an international treasure; an entity which lasts in people’s lives for a long time. I cannot say Zynga will never be up for sale, but we are more likely to IPO rather than be sold. Being sold is not my ambition. Going public makes it easier for investors to monetise your product.” [via The Telegraph (UK)]