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Abstract

Zynga Inc. had fallen under financial hardship shortly after the company decided to
go public in 2011. The company has struggled due to both external and internal
factors affecting the company. Outside pressures such as stockholder expectations
and pressures to succeed may have pushed Zynga to expand itself too quickly.
Internal mistakes have produced negative consequences in different departments
such as Human Resources, Management, Marketing, Finance, and Technological
research and development. The company must develop a new strategy to turn itself
around before the losses become too much to handle. A new CEO with a history of
success and cost cutting decision making is a good start in the right direction for
Zynga. An in-depth analysis will show areas that the company is struggling in and
from there the company will be better equipped to decide what steps to perform
next. The next few steps made by Zynga will be very important in deciding how the
company performs in the future.

Table of Contents
5 Cs Analysis
Company

Consumers 8
Competitors 11
Collaborators
Context

16

16

Zynga SWOT Analysis


Strengths

17

Weaknesses 18
Opportunities
Threats

19

Timeline

21

18

Problems Analysis 23

17

Industry Chain

23

Strategy Analysis

23

Financial Analysis

28

Technical Analysis 35
Marketing Analysis 39
Human Resources 45
Management

51

Solution Approaches

60

1. Developing Innovative Games60


2. Expand to Asian countries: China, Korea, and Japan.

65

3. Improve Human Resource Management and Company Culture 68


Conclusion

72

References 73

5 Cs Analysis
Company
Zynga Inc. was founded in April, 2007, in San Francisco by Mark Pincus with the
name Presidio Media, a limited liabilities company. In November 2010, Pincus
changed the company name to Zynga Inc. after his late beloved American Bulldog
Zinga. The company also used the bulldog image for its logo, giving the company
a spirited and loyal meaning behind its name.
The company first successes were on MySpace with ad-based games. However, the
CEO of the company realized the bright future of Facebook. In May 2007, Facebook
created its Facebook Platform, which invited developers to create their own
applications on Facebook.com and reach customers through their site. Pincus
decided to jump on the wagon by creating applications for Facebook. Zynga quickly
launched its first Facebook game, Zynga Poker, in September 2007. Nowadays,
Zynga has become the world's leading social games provider with 240 million
monthly active users and 60 million daily active users in over 175 countries. Zynga
provides free online social games through social networks platforms such as
Facebook, Zynga.com, MySpace, Yahoo, and Google+, and mobile platforms iOs and
Android. With Internet access, players can join Zynga games from anywhere in the

world, whenever they want. They can play alone, with friends, or with random
players through a variety games such as: harvesting crops; raising livestock;
running a restaurant; and playing poker.
Founder
Mark Jonathan Pincus was born in 1996 in Chicago. He went to study business as an
undergraduate at the University of Pennsylvania. After graduating, he worked in the
finance industry as a financial analyst for Lazard Frres and as Vice President at
Asian Capital Partners in Hong Kong. Then, he went back United States to get an
MBA at Harvard Business School. Before launching his first start-up, he worked for
several big corporations on the East Coast. Pincus was the founder and CEO of
many companies; however, some companies succeeded while others did not. Pincus
admitted in an interview, I failed on other peoples money. .I got fired or asked to
leave from all my jobs. (Takahashi, 2011)
Pincus moved to Silicon Valley in 1995. He borrowed $250,000 dollars and started
his first company, FreeLoader. Seven months later, Pincus was able to sell it for $38
million dollars. After the first success, Pincus joined the Silicon Valley new
entrepreneurs and had enough money for his new adventures. In August, 1997,
Pincus started his second company, Replicace, with Scott Dale and Cadir Lee. They
created Support.com, a provider for online service and support automation
software. This company went public in 2000 for $14 per share. In the first day of
releasing, the stock price went up 33%; following that, Pincus managed to sell some
of his shares and made a lot of money before Support.com price crashed. Pincus
then partnered with Martin Roscheisen to establish Tank Hill Projects, an incubator,
in January, 2000. In a short period of time, the company was shut down. Pincus was
able to get his funds back with minimum loss.
One of the first social networking sites, Tribe.net, was found by Pincus, Paul Martino,
and Valerie Syme in early 2003. It was described as Craigslist meets Friendster.
Pincus was kicked out of this company in 2005; however, a year later he took it back
and sold it to Cisco in March 2007 (Takahashi, 2011).
Pincus is known to be very good at investing. He is an angel investor of many startup companies which later became multiple billion dollar companies such as:
Napster, eGroups, Technorati, Socialtext, Friendster, Ireit, Nanosolar, Merlin, Naseeb,
EZboard, Advent Solar, Xoom and Facebook.
Zynga.org
Zynga.org was established in 2009 after the Haiti Earthquake as a Corporate Social
Responsibility to help rebuilding Haiti. In 2012, Zynga.org finally became an
independent non-profit organization. It has partnered with many non-profit
organizations such as Feeding America, Habitat for Humanity, and many industry
partners such as Facebook, Games for Changes, and Newschools venture fund.

Through Zynga's games, this organization has raised more than $6 million for
several international nonprofits and more than $10 million for world social causes.
Management Team
Mark J. Pincus

| Chairman & Chief Product Officer

Don A. Mattrick

| CEO |

Mark Vranesh

| CFO |

Reginald D. Davis | General Counsel, Sec & Sr. VP |


Steven Chiang

| Executive VP-Games

Barry Cottle | Executive VP-Games


Vish Makhijan
Lisa Cha

| Sr. VP-Business Operations

| Manager Marketing and Communications

Executive Changes
Name| Date |
Steven Chiang

| 15-AUG-13 |

Colleen McCreary | 15-AUG-13 |


David Ko

| 15-AUG-13 |

Consumers

Players under 18 years:


* Demographic perspective:
* Sex: They could be both males and females.
* Living condition: Normally, they live in well-off families, and are not usually poor.
* Occupation: They are primarily students in junior schools or high schools.
* Education background: They are receiving education in schools.

* Growth environment: Any environment, such as single parent or large family, is


possible.
* Psychological perspective:
* Life style: They could go for unique or stylish style.
* Personality: They could be idealists or perfectionists.
* Intention or motivation: Sometimes, they could get the opportunity as a reward,
for example, good grades or nice behavior. And sometimes for entertainment, for
example, during vacations and festivals.
* Behavioral perspective:
* Time: They would be permitted to play online games during Weekends and
vacations.
* Frequency: In school seasons, they would play games about twice a week; during
vacations, it could be every day.
* Duration: There is time limitation for boys and girls.
* Habit: They are easy to be immoderate or even obsessed if there is no reminder.
* Game preference:
* Role play games
Because most of them have rich imaginations and few experiences of social life,
playing as heroes they admired can enable them to have a sense of achievement
and sense of mission.
Players 19-35 years:
* Demographic perspective:
* Sex: both males and females.
* Living condition: Good conditions, few are rich, few are poor.
* Occupation: college students, job-waiting individuals, or part of the work force.
* Education background: Any background, from junior school level to graduate
level, is possible.
* Growth environment: Any environment, such as single parent, or large family, is
possible.
* Psychological perspective:

* Life style: They could go after special, distinctive, or immoderate life.


* Personality: They could be escapists or individualists.
* Intention or motivation: To dominate their lives themselves.
* Behavioral perspective:
* Time: Any time they want.
* Frequency: It could be every week, every day, or even every second.
* Duration: Any amount of hours they want.
* Habit: They would normally not focus on one single game and keep trying new
ones, especially if they seem really interesting or challenging.
* Game preference:
* Tactical and strategic games
As for players like college students, who have less responsibilities and more free
time, would like to try games requiring more tactical and strategic points.
* Casual games
Due to the time limitation, working staffs play casual games for relaxation.They
adore casual games because they are easy to operate and can pause whenever
they want.
Players over 36 years:
* Demographic perspective:
* Sex: both males and females.
* Living condition: They are good generally, or at least not bad, but few are rich.
* Occupation: Any occupation, housewives, white collars, retired people.
* Education background: Any background, from junior school level to graduate
level.
* Growth environment: Any environment, such as single parent, or large family, is
possible.
* Psychological perspective:
* Life style: They could go after comfortable and easier life.
* Personality: They could be easy-going and high compatibility.

* Intention or motivation: They prefer to make the best of each situation.


* Behavioral perspective:
* Time: Any time they want.
* Frequency: It could be every week, every day, or even every second.
* Duration: Any hours they want.
* Habit: They would adore classical, easy to playing, or beautiful-designed games.
* Game preference:
* Classical games
Classical games, such as poker, are popular in this group, because those games are
available in social occasions and could help them better communicating with each
other.
* Easy to play games
Those games have short durations for each round, usually have a bunch of levels,
and are beautifully designed. People in this group might be attracted by the simple
but well-motivated games.
Competitors
According to the 2012 Annual Report of Zynga, Zynga Inc. has competitors both
locally and globally in all aspects. Particularly, they compete for consumers leisure
time, attention, and discretionary spending with other social game developers. This
is based on a number of factors, including quality of player experience, brand
awareness, reputation, and access to distribution channels. Due to the rapidness of
the industry and fierceness of the competition, Zynga is struggling to survive. Other
social game developers have developed more compelling content to compete with
Zynga; thus, competitors have adversely affected Zyngas ability to attract new
game players and retain current players entertainment time. Zyngas competitors
include:
*
Game Developers for Facebook and Other Social Networks: Some of
these competitors have significant financial, technical, and other advantages such
as greater name recognition and longer operating histories. It is easy for them to
create similar games to reach Zyngas players. Major game developers include:
DeNA, Electronic Arts Inc., King.com, Social Point, The Walt Disney Company, Vostu,
Ltd. and Wooga GmbH.
*
Game Developers for Mobile: This sector is characterized by the
frequency of product introductions, the speed of mobile platforms introductions,

new technologies and new mobile application storefronts. Competitors for the
mobile game sector include: Addmired, DeNA Co. Ltd., Disney Mobile, Electronic
Arts, Gameloft, Glu Mobile, GREE International Inc., Rovio Mobile Ltd, Storm8, Inc.
and Supercell.
*
Other Game Developers: Game players may also play other games on
computers and other electronic devices, such as an iPad or consoles like the PSP
and Wii. Competitors include: Activision Blizzard, Inc., Electronic Arts, SEGA of
America, Inc., The Walt Disney Company and THQ Inc. These competitors exist in
the social game sector indirectly, because some games of these competitors have
social features and community functions where game developers can engage with
their players.
Based on the divisions of Zyngas competitors and competitors overlapped in all
these divisions, Electronic Arts Inc. and DeNA Co. Ltd. are defined as the main
competitors of Zynga Inc. In order to make it clear, comparison of financial data is
needed as Exhibit 1 showed below.
Exhibit 1 _ Comparison of Financial Ratios
Company

| Zynga

| EA

| DeNA

Year | 2012| 2011| 2012| 2011| 2012|


ProfitabilityROE (%)EPS ($)
| -44.00%-0.28
| 3.03%0.23 | 33.80%3.55
|
LiquidityCurrent RatioFinancial Leverage
| 1.232.23 | 1.701.00 |

| -11.72%-1.40

| 2.921.41

| 3.031.44

| 4.19%0.31
| 1.212.24

Growth/ LossNet Income($)Net Margin (%) | -209.45M43.48% | -404.32M69.31%


| 98M2.58% | 76M1.83% | 497.18M23.10% |
(Data Resource: 2012 Annual Report of Zynga, EA and DeNA)
We can easily find that Zynga faced a net income loss in both 2011 and 2012, as
the data indicates that Zynga did worse in 2012 than in 2011 while EA and DeNA
performed better in 2012. Although Zynga had the highest current ratio, which
leverages the solvency of a company, it also indicated that during the past two
years, Zynga retained a lot of money on current assets which negatively affected
the profitability of the company. Whats more, during the past two years, Zynga had
a negative ROE (return on equity), which measures a corporation's profitability by
revealing how much profit a company generates with the money shareholders have
invested. (Investopedia, 2013) In the meanwhile, competitors such as DeNA did
much better (33.8% and 56.8% in 2012 and 2011 respectively) than Zynga on ROE.
Zynga also faced a negative EPS (earnings per share), which is the portion of a

company's profit allocated to each outstanding share of common stock, while both
EA and DeNA performed much better than Zynga in this regard.
The following Exhibits 2 and 3 show the comparisons of stock prices since the IPO of
Zynga Inc. and the differences between Zynga and its competitors.
Exhibit 2 _ Comparison of Stock Prices between Zynga & EA

(Data Resource: Yahoo Finance)

Although EA faced a downtrend from December 2011 to August 2012, its stock
started to increase in September 2012. For Zynga, they had an uptrend during the
beginning few months (from November 2011 to March 2012) after their IPO;
although, they started to decrease in stock price shortly after.
Exhibit 3_ Comparison of Stock Prices between Zynga & DeNA

(Data Resource: Yahoo Finance)


As far as the comparison between Zynga and DeNA, on one hand, they both faced a
downtrend in 2013 to 2013; on the other hand, DeNA is a developed Japanese
corporate company that has dominated the Japanese market, so the volume of
stock and financials is tough to compare with Zynga.
Compared with EA and DeNA, Zynga lacks significant financial backing. For
instance, DeNA is a globally developed game company that has a very strong
financial backup to compete in the global game market. Moreover, DeNA and
competitor EA also have a higher brand awareness and stronger identity than
Zynga. DeNA has developed a strong, loyal customer base in Asia due to its games
it has developed in years past. EA is also a global game company that has many
subsidiary corporations all around the world. Though EA backed out from the Japan
market in 2002, it still did quite well in other countries and regions, such as Canada,
United Kingdom, Australia and Hong Kong. Zynga does have certain strongpoints,
for instance, their easy access to games and primary competitive content is very
appealing to users. Zynga has a lot of ground to catch up on if they want to
compete on the same scale as these big competitors.
A competitive profile matrix (CPM) should be taken into account to better show a
clear picture of Zynga and their competitors strengths and weaknesses. The CPM
score is measured on basis of critical success factors, and each factor is measured
in same scale, meaning-the weights remain the same for each company, but the
ratings vary.

Exhibit 4 _ Competitive Profile Matrix


|

| Zynga

Critical success factors


| Weight Score
Market share
0.52 |

| DeNA

| Weight
| Rating

| 0.13

Compelling contents
| 0.60
|
Innovativeness
0.56 |

| EA

| Rating
| Weight Score
| Weight Score
|

| 2 | 0.26

| 0.15

| 4 | 0.52

| 2 | 0.30

| Rating
| 4 |

| 3 | 0.45

| 4

| 0.14

| 2 | 0.28

| 2 | 0.28

| 4 |

Global expansion | 0.07


0.28 |

| 1 | 0.07

| 2 | 0.14

| 4 |

Awareness of games
| 0.36
|

| 0.12

| 3 | 0.36

| 3 | 0.36

| 3

Goodwill of company
| 0.32
|

| 0.08

| 2 | 0.16

| 3 | 0.24

| 4

Customer loyalty | 0.12


0.24 |

| 2 | 0.24

| 2 | 0.24

| 2 |

Advertising | 0.11
|

| 2 | 0.22

| 3 | 0.33

| 1 | 0.11

Playing fees | 0.04


|

| 4 | 0.16

| 2 | 0.08

| 2 | 0.08

Social media connection


| 0.10
|
Total | 1.00

0.05
| 2.25

| 4 | 0.20

| 3 | 0.15

| 2

| 2.83

| 3.17

The Exhibit 4 competitive profile matrix shows that Zynga has the lowest weight
score (2.25) compared with competitors (EA weights 2.83 and DeNA weights 3.17).
In other words, Zynga is less competitive in the current market based on these
critical factors. It is important to note that there is great potential for Zynga to
improve.
Collaborators

* Facebook and Zynga prior to early 2013 had a mutual relationship; has since
dissolved
* Recently partnered with HBO and Disruptor Beam to bring a, Game of Thrones,
social game to the world (Dyer, 2013)
* Acquisitions include:
* OMGPOP
* Bonfire Studios
* Buzz Monkey
* Newtoy
* XPD Media
* Challenge Games
* Area/Code
* Floodgate Entertainment
* MarketZero
* Invested over $310 million into acquisitions

Context
* Quick changing industry
* Social gaming is estimated to grow in to a $7 billion dollar industry by 2015 if
it is left unregulated (Harvel, 2013)
* Social and mobile gaming video Ads has the highest completion rate in the
online Ad industry, i.e., 91%.
* Social games are centered on shared user experience with in the social media
application framework (such as Facebook) in which they are played.
* The average engagement rate of Social Gaming Ads is 20%, as compared to
0.50% of Facebook-brand pages
* In the past year numerous regulators have called for stricter rules surrounding
the industry, multimillion-dollar venture funds have been established, and the
granting of online gaming licenses in Nevada, New Jersey and Delaware has fuelled
migration to real-money gaming.

* Zynga looking into partnering with Nevada casinos to enter the gambling
gaming
industry.
* By 2014, 50% of social networking users and 34% of total internet users will
play social games.
* Demographics of Social Gamers: (older females)
Gender: 54% Female and 46% Male
Avg. Age: Female 40 and Male 37
Zynga SWOT ANALYSIS
Strengths
* Leading provider of social game services (<240 million users playing games)
* Games on global platforms starting to expand (Facebook, Google+, Tencent,
Apple ios, Google android)
* Strong story behind brand name
* New CEO, Don Mattrick, turned Xbox around and made it profitable
* Completely focused on social and mobile gaming
Weaknesses
* Stock plummeted 17% this year (2013). Their stock is under $3.
* The company just underwent two rounds of layoffs (18% of its workforce) and
shut down offices in New York, Los Angeles, and Dallas (Kain, 2013)
* Company co-founder Mark Pincus stepped down as CEO at the beginning of July,
2013
* Unstable/weak company management
* Has not created a successful hit game since Farmville and Words with Friends.
They need more creative and innovative games
* They dropped plans to pursue a license for online gambling in the United States
which caused their stock to drop (Isidore, 2013)
* Not collaborating with Facebook or any major social media outlets
Opportunities
The Change and Growth in the Gaming Industry.

* Even though U.S games market is flat at around $21.6 billion, the online and
mobile games are growing (Global Games Consoles Industry Profile, 2013).
* The global games consoles market will be worth $22,212.6 million. Compare to
2012, it will increase by 15.4% (Global Games Consoles Industry Profile, 2013).
* Asia is very dominant in the game industry.
* 84% of Chinese population playing video games compared to 69% of Americans
(McDonald, 2013).
Virtual Goods is estimated to grow significantly.
* The current global virtual goods revenue is $6 billion and it will increase to $22
billion by 2015 (McDonald, 2013).
* The main virtual goods and subscriptions market is projected in China and East
Asia.
* 67% of iPad and 63% of Android tablet Chinese users buy virtual goods
(McDonald, 2013).
* 37% of iPad and 33% of Android tablet American users buy virtual goods
(McDonald, 2013).
* Virtual goods are accounted for 60% of social game revenue, 20% from
advertising, and 20% from others offers (Casual Games Association, 2012).
Social gaming
* Social gaming is forecast to have a value of $9 billion by 2015, and it will be the
leading games market (Casual Games Association, 2012).
* 41% of US internet users, about 600 million users, are actively playing games on
social networking sites and half of them play social game every day (Casual Games
Association, 2012).
Mobile games
* The main mobile revenue in 2013, 71%, comes from games (Street, 2011).
* Apple Stores is dominated 65 percent of total mobile revenue, but Google Play is
growing. With android market has grown larger than iOS, 68% global market, in
future Google Play will take the lead (Street, 2011).
* 12% of Europeans, 22% of Americans, and 47% of Japanese access games
through mobiles at least once a month (Street, 2011).

* The mobile games market is projected to grow to $18.3 billion by 2016 (Street,
2011).
* In China, mobile gaming is the most popular market. 79% of total players use a
tablet and 57% of them use smart phone (McDonald, 2013).

Threats

Market
* After decades of years development, online game industry is now in the life
cycle of mature period. Changes, such as new technologies and different types of
games, are expected to break through for a new era. Game makers now struggle to
differentiate, as copycat games are released quickly to counteract any release of a
popular title.
Technology
* Zynga is currently the worlds leading provider of social game services,
however, both current and potential competitors are developing rapidly as well. The
reason is that core techniques, like game engine, are no longer absolute advantages
for Zynga, its competitors, such as Electronic Arts, Playdom, Activision Blizzard,
Tencent, CrowdStar, etc. are all strong opponents.
Regulations
* Regulations, such as timer and classification, are proposed to protect certain
group of population. Take the timer for example, if 1% of the 240 million active
players minus one minute per month, the total amount of online time would lose
2.4 million minutes, which could be a huge lost for advertising revenue.
Hackers
* Hackers, such as Anonymous, take Zynga as one of their targets. They attack
tech companies for fun and for sense of achievement, or sometimes because they
feel unhappy for certain issues.

Timeline

Problems Analysis

Industry Chain

The industry chain of social games is composed of developers, publishers,


distributors and game players from upstream to downstream. The sophisticated
operation process starts from the consumers desire of high quality games from
publishers and ends with the satisfaction of users playing these high quality games.
This is the tale of how the industry is structured and how its main players function in
it.

As illustrated above, publishers, such as Electronic Arts, Sony, Warner Bros., and
Activision Blizzard, play a crucial role in the industry chain because they are the
connecting links between the preceding and the following, yet at the same time
they are in charge of both the game agencies and promotions. The publishers
ensure that the industry chain will move on to some extent. Developers, such as
Nintendo and Ubisoft, who have many related resources and channels, are
responsible for games research and development. This illustrates how sometimes
companies can own publishers and be the developers at the same time.
Furthermore, platforms such as Facebook, work as the docking between the games
and the game players by providing access to download games.

Strategy Analysis
Based on the information provided by Zynga, its strategy at the time included seven
aspects, which are:
1) To make games free, accessible, and fun
2) Launch new games
3) Continue mobile growth
4) Enhance existing franchises
5) Create the leading game network
6) Expand into real money gambling
7) Extend technology leadership position

In order to figure out whether those points are accurate, effective and could be
efficient and well implemented, we would like to first analyze those aspects through
three dimensions:

1. Internal factor evaluation matrix


Key Element

| Weight

Internal Strengths |
Brand equity

| 0.05 | 3

| Score
|

| Weighted Score

| 0.15 |

Leadership of online social game developer | 0.10 | 4


Global platforms

| 0.05 | 3

Active users | 0.10 | 4

| 0.40 |

| 0.15 |

| 0.40 |

Minimized risk of single social partner | 0.05 | 3

| 0.15 |

Extended platforms and services

| 0.05 | 3

| 0.15 |

More network operators | 0.05 | 3

| 0.15 |

Internal Weaknesses

Weakened R&D and innovation | 0.15 | 1


Declined active users

| 0.10 | 1

|
| 0.15 |

| 0.10 |

Weakened collaboration with social media

| 0.10 | 2

Insufficient repeated purchases | 0.10 | 1

| 0.10 |

Continuous net loss


Total | 1.00 |

| 0.10 | 1

| 0.20 |

| 0.10 |

| 2.20 |

The elements, which are selected from Zyngas current strategy, are very significant
in Zynga being a leader in the online game industry. Zynga could impact the
industry if it has any major activities or changes. Zyngas weaknesses such as poor
research and development added with a lack of innovation are a very concerning
statistic that is brought up.
Moreover, the total result of 2.20 indicates that both the internal and external
conditions are not positive because the index is now lower than the average level,
which could be a nightmare for big shot like Zynga. Therefore, it would be necessary
for Zynga to revise its strategy.

2. External factor evaluation matrix


Key Element

| Weight

| Score

External Threats

| Weighted Score

Large amount of casual players | 0.10 | 1

| 0.10 |

Both existing and new Competitors

| 0.03 | 2

| 0.06 |

Changes of consumer preference

| 0.10 | 2

| 0.20 |

Rapidly upgraded technology

| 0.10 | 3

| 0.30 |

More comprehensive laws and regulations

| 0.02 | 2

External Opportunities

| 0.04 |

New business in Real Money Gaming | 0.10 | 3

| 0.30 |

The growth of advertising market

| 0.15 | 2

| 0.30 |

The growth of social games market

| 0.15 | 3

| 0.45 |

Third-party developers

| 0.20 |

| 0.10 | 2

Trends of new platforms and services | 0.10 | 3


Trends of 3D games
Total | 1.00 |

| 0.05 | 3

| 0.30 |

| 0.15 |

| 2.40 |

This table represents the degree of effectiveness and efficiency of Zyngas current
strategy has acted, on which it values most.
The index total of 2.40 reveals that Zynga could realize the threats and
opportunities to some extent, but there are far more than they claim to encounter.
The possible explanation of a lower index here is that the loss from threats cannot
be well neutralized by the benefit from opportunities; in other words, Zynga has not
made full use of their opportunities. The profit generated either direct or indirect
from opportunities is reduced, and the expenses and costs are somehow increased
on the other side.

3. Competitive profile matrix


Key Element

| Weight

| Zynga

| DeNa

| Electronic Arts

|
| Score
Score | Weighted Score

| Weighted Score
|

| Score

| Weighted Score

Advertisement

| 0.05 | 4

| 0.20 | 3

| 0.15 | 3

| 0.15 |

Game quality

| 0.10 | 3

| 0.30 | 4

| 0.40 | 4

| 0.40 |

Innovation | 0.10 | 3

| 0.30 | 4

| 0.40 | 4

| 0.40 |

Popularity

| 0.10 | 3

| 0.30 | 4

| 0.40 | 4

| 0.40 |

Price competitiveness

| 0.05 | 2

| 0.10 | 3

| 0.15 | 3

| 0.15 |

Control management

| 0.05 | 3

| 0.15 | 3

| 0.15 | 3

| 0.15 |

Platforms and devices

| 0.10 | 3

| 0.30 | 4

| 0.40 | 2

| 0.20 |

Partner loyalty

| 0.05 | 2

| 0.10 | 4

| 0.20 | 3

| 0.15 |

Consumer loyalty | 0.10 | 2

| 0.20 | 4

| 0.40 | 3

| 0.30 |

Consumer satisfaction
Market share

| 0.10 | 2

| 0.20 | 4

| 0.40 | 4

| 0.40 |

| 0.10 | 3

| 0.30 | 3

| 0.30 | 3

| 0.30 |

Financial condition | 0.10 | 1

| 0.10 | 4

| 0.40 | 4

| 0.40 |

Total | 1.00 |

| 3.75 |

| 3.40 |

| 2.55 |

This table tells us the key performance index in online social game industry and
what powerful competitors value most when they fight for higher performance.
It is clear that right now, Zynga is much less competitive than its competitors, DeNa
and EA, according to the index of 2.55, 3.75 and 3.40. Just as the founder and CEO
Mark Pincus said, it is less creative, less innovative, less productive and less
profitable in recent years, especially in year 2012.
Therefore, there are at least two problems with Zyngas strategy. First, the strategy
fails to emphasize on the differentiation and competitiveness it claimed; second, the
strategy is not accurate enough for company-wide implementation.
Tools, such as a balanced scorecard, could be a solution for Zyngas problems. A
balanced scorecard is known as an effective performance management tool and it
has been proved to be efficient for strategy implementation and evaluation. There
are four dimensions in BSC, including financial perspective, customer perspective,
process perspective and learning and growth perspective. It has covered crucial
points Zynga and its competitors valued most. Furthermore, the contents under
each dimension could specify abstract strategy and correct deviation.

1) Financial perspective:
* Goals: increase profitability, decrease expenses and costs
* Index: ROE, sales revenue, net income, unit margin
2) Customer perspective:
* Goals: increase users satisfaction
* Index: users profitability, users retention rate, users life, users lifetime value,
repeat purchases
3) Process perspective:
* Goals: improve innovation and creation, narrow the interval of launching eyecatching games, increase popularity
* Index: weighted-average days of new game introduced, ratio of successful
games, ratio of sales revenue from new users
4) Learning and growth perspective
* Goals: complete and improve rules such as career planning and system of
rewards and penalties, improve the ability of teamwork and communication,
increase employee satisfaction
* Index: quantitative data from questionnaire and peer evaluation, demission rate,
employment rate, net labor turnover rate.

* Financial Analysis
To begin with the analysis, the business model should be first taken into account.
Basically, Zynga makes money via two ways: payments from players and partner
businesses. For example, Zynga can collaborate with or advertise on Facebook,
MySpace, and other social media platforms. Many Zynga games require Energy to
play, which is a characteristic that consumers can pay for to become better
engaged in a game. After expending a certain amount of energy, gamers must wait
a specific amount of time for the energy to slowly replenish. After energy is
replenished, players can engage in games again. Zyngas support mechanisms take
advantage of this strategy. Zynga games are linked to offers from some partners,
which offer surveys and services to players to earn game credits. Players can
choose to buy these surveys or services from Zyngas partners, thus allowing them
to replenish their energy instead of waiting for their allotted time function to pass.
Players also have the option to purchase game credits from Zynga directly. From

within the game, players can buy the points for a fee; for instance, 10 dollars for 50
game credits that can be used to purchase virtual goods or extend playing times.
Zynga started running advertisements and sponsored stories on Facebook from June
2012 and the revenue is to be divided between Facebook and Zynga, as they
continue their partnership. The chart below shows the brief information about
Zyngas ingredients of revenues and costs.
Zynga Inc. Business Model
Revenue
|

* Virtual goods (game credits) * Partner businesses * Advertising

Cost of goods sold | * Web hosting & data center costs * Payment process fees
* Salaries & benefits for customer support and infrastructure employees
|
Research & Development| * Salaries & benefits for software developer and
engineers * Outside consulting and service fees * Facilities and overheads |
Sales &Marketing | * Players acquisition costs * Branding & marketing costs *
Salaries & benefits for sales and marketing employees
|
General & Administrative | * Salaries & benefits for executive, legal, finance and
HR teams * Outside consulting and legal service costs
|
Zynga Inc. went public under the ticker ZNGA on NASDAQ in December 2011, at an
original price of $10. As Exhibit 5 shows, it reached the peak of $14.69 in March
2012, but then dropped steadily, hitting the bottom stock price of $2.09 in
November 2012. The reasons for the fall of the stock price are relevant to some
major issues within the company.
Exhibit 5 Stock Prices Trend

Date Resource: (Quotes.morningstar.com, 2013)


There was a report about the working environment and atmosphere about Zynga,
as former employees complained that Zynga was never a warm and fuzzy place to
work. (The Atlantic Wire, 2013) This former employee said Zynga was one of the
most evil places to work, both from a culture perspective and in its business
approach. Negative reports never stopped about Zynga. The founder and former
CEO Mark Pincus didnt encourage innovation though he had employed many
developers and engineers. Instead, Zynga chose to purchase games from other
companies, sometimes even buying out the whole company to become part of
Zynga. This trend of purchasing instead of developing will later be explained as a
main factor contributing to Zyngas demise.

On March 21, 2012, Zynga announced that they purchased game developer,
OMGPOP, for $180 million in order to acquire the very popular game Draw
Something. However, after the acquisition, a remarkable drop in popularity of this
game was noticed, as daily active users dropped from 15 million to 10 million in the
first month post-acquisition. On October 2012, Zynga announced that they had
overpaid for the company, valuing the OMGPOP asset at around $90 million, a stark
contrast from what they had originally paid.
Furthermore, in June 2012, Zynga lost a bidding war for the pilot of a TV game show
based on Draw Something. In October 14, 2012, Zynga filed a lawsuit against a
former general manager for allegedly misappropriating trade secrets. This suit
claims that the former general manager copied important confidential information
from his computer before leaving Zynga to work for another rival social game
company. Unrest ran rampant at Zynga, as employees were afraid of where the
direction of the company was headed.
Using the 2012 Annual Report of Zynga, an Income Statement Summary (see
Exhibit 6 below) was created to better analyze the data in a clearer way. Zynga had
total revenue of $597,459, a net income of $90,595 in the year ended December 31
2010, and total revenue of $1,140,100 in year ended 2011. Even though that
amount almost doubled that of the revenue in 2010, Zynga ended up incurring a net
loss of $404,316 in year ended 2011. In the year ending December 31, 2012, the
revenue of Zynga increased 11% compared to 2011; but, it still faced a net loss of
$209,448. Although Zyngas revenue increased year by year, the costs increased
dramatically as well. In year 2010, the cost of revenue was only $176,052; it jumped
to $330,043 in 2011 and then $352,169 in 2012 respectively. As mentioned before,
Zynga kept purchasing games from other game makers instead of relying on its own
research and development team, raising the cost of revenue substantially. Zynga
actually faced a net loss of $90 million by simply calculating the purchase price and
the actual market value. (Investor Bistro, 2013)

Exhibit 6 Zynga Income Statement Summary


| Year Ended December 31

| 2010| 2011| 2012|


Revenue

| 597,459

| 1,140,100 | 1,281,267 |

Total costs and expenses | 471,987

| 1,545,716 | 1,464,238 |

Operating Income (Loss) | 125,472

| (405,616) | (182,971) |

Other Income (Expenses)| 1,587

| (526)

| 23,396

EBIT | 127,059

| (406,152) | (159,575) |

Provision for Income Taxes

| 36,464

Preferred Stock and Other Adjustments


Net Income (Loss) | 27,895

| (1,826)

| 49,873

| 62,700

| N/A | N/A |

| (404,316) | (209,448) |

(Data resource: 2012 Annual Report)

To look deeper into Zyngas profitability and solvency of the past four years, one
should compare return on equity, earnings per share, current ratio, quick ratio,
financial leverage and gross margin as the following Exhibit 7 shows.
Exhibit 7 Financial Ratios Analysis
| 2012| 2011| 2010| 2009|
ROE (%)EPS ($)
|

| -44.00%-0.28

| -11.72%-1.40

| 18.9%0.14 | N/AN/A

Current RatioQuick RatioFinancial Leverage | 2.922.741.41


| 1.741.6412.62
| 0.950.93N/A
|
Net Income ($)Gross Margin
| -53M53.3 |

| -209.45M72.5

| 3.032.931.44

| -404.32M71.1

| 91M70.5

As seen in Exhibit 7, Zynga did well in year 2010, not only because it made profits
of 91 million dollars, but also because it had a good solvency. In detail, Zynga had a
current ratio of 1.74, which measures the ability of a company to pay its short-term
liabilities (debts and payables). Normally, the higher the current ratio is, the better
the solvency is, and current ratio around 2 is seen as good. If the current ratio is too
low, for example, 0.95 in 2009, it suggests that the company was unable to pay off
its obligations. However, if current ratio is too high, 2.92 and 3.03 in 2012 and 2011
respectively for instance, it may negatively affect the companys liquidity and make
the solvency seem better. The current ratios in the most recent two years show that
Zynga was not in good financial health. Although it does not necessarily mean
Zynga is going to go bankrupt, it is definitely not a good sign.
In addition, during the past two years, Zynga had a negative ROE (return on equity),
which measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested. Basically,
investors wish to see a high ROE in order to feel confident enough to invest in
Zynga. The negative ROE is a bad sign for investors especially for those who hold a

lot of stocks of Zynga. As of this July, Zynga has reported that it lost nearly half of
its user base from the previous year. Consequently, investors decreased Zynga's
valuation by $400 million.
According to 2012 Annual Report, the depreciation cost increased more than 50%
from the year ended December 31, 2011 to the year ended December 31, 2012.
This is due to Zyngas purchasing of other game developers such as OMGPOP and
Buzz Monkey. However, Zynga underestimated the difficulties of acquiring and
merging a new company. Their purchases did not perform well, especially OMGPOP,
as they had to write off 90 million dollars from the account. It is also a reason Zynga
had to increase their net borrowings of $99,780,000 in 2012. With increasing debts
and inappropriate decisions, Zynga faced a steadily dropping stock price as well as
unhealthy financing.
However, recent data in Zyngas Q3 2013 Earnings report showed that Zynga was
getting better. Through cost-cutting efforts and new leadership, the company seems
to be back on the right track. As seen in Exhibit 8 below, Zynga had a net loss of
$11,740 in nine months ended September 30, 2013, which was much lower than the
net loss of $160,887 in the same time frame ended 2012. Additionally, the net loss
of three months ended September 30, 2012 was $52,752,000 while the net loss of
same period ended September 30, 2013 was only $68,000, a phenomenal
improvement which put the company closer to the breakeven point.
Exhibit 8 _ Consolidated Quarterly Income Statements (in thousands)
| Three Months Ended
| September 30,

| Nine Months Ended

| September 30,

| 2013| 2012| 2013|


Revenue:

Online game

| 31,050

| 202,580

Costs and expenses:


Cost of revenue

| $ 174,370 | $ 285,587 | $ 607,262 |

Advertising | 28,210
Total revenue

| 59,011

Research and development


Sales and marketing

| 316,637

| 696,904

| 90,150

| 189,482

| 81,023

| 155,609

| 334,526

| 21,170

General and administrative

| 89,642

| 36,586

| 34,012

| 79,640

| 35,353

| 121,193

Impairment of intangible assets | 10,217


Total costs and expenses | 205,433
Income (loss) from operations
Interest income

Other income (expense), net

| 413,191

| (2,853)

| 965 | 1,144

| 3,233

| (959)

Provision for (benefit from) income taxes


|

| 10,217

| 735,058

| (96,554)

| 929 | (350)

Income (loss) before income taxes

Net income (loss) | $ (68)

| 95,493

| (38,154)

|
| (4,465)

| (95,760)

| (39,386)

| (891)

| (43,035)

| (27,646)

| $ (52,725) | $ (11,740) |

(Data Resource: Zynga Q3 2013 Earnings)

Other Relevant Issues Affecting Finance


It is hard for Zynga to retain loyal players, especially since the life cycle of social
games are becoming shorter. These social games must be updated very fast to
meet players needs; if not, players may get increasingly bored of the same content.
For example, when Zynga bought Draw Something, the game was one of the most
popular games in the world as players from all around the world played it together.
One week after the acquisition, Zynga lost 5 million players. The reason is simply
due to players getting bored and the game losing their attention. The mobile and
social gaming industry is an extremely tough industry to compete, as users can
move on to new games extremely quickly. Loyalty is extremely hard to build in this
business and without more creative innovations and ideas introduced, Zynga games
may seem like one-hit-wonders.
The high turnover rate is another factor influenced financing. As stated in 2012
Annual Report, We have experienced significant turnover in our headcount over the
last year, which has placed and will continue to place significant demands on our
management and our operational, financial and technological infrastructure.
(Zynga, 2012) Although Zynga had tried some cost reduction initiatives to align
expenses with revenue, it has to continue to spend money to hire new qualified
employees as well as motivate and retain current employees. The former CEO Mark
Pincus tried to reduce the costs; however, he failed at doing so. Early in June this
year, Zynga announced that it would be laying off 520 employees, around 18% of
its workforce, for the sake of stabilizing finances at the struggling video game
company. (Peptione, 2013)

On July 1, 2013, Zynga confirmed that it had hired Microsofts Interactive


Entertainment President Don Mattrick as its new CEO. According to Zynga's 8-K
regulatory filing, Mattrick would receive about $50 million in cash and stock
compensation over several years. Though the new CEO made some efforts to help
Zynga get back into the game, investors have already unloaded the firms shares,
sending them down around 15 percent in regular trading. (Wilhelm, 2013)
Also, BusinessWeek reported in this July that three top Zynga executives had left the
company. (Macmillan, 2013) A senior vice president of games, a vice president who
ran Zyngas casino division, and a vice president of games have all resigned.
With the new CEO Don Mattrick and new management team, Zynga seemed to try
its best to homerun and get back to the game. However, if Zynga wants to be as
profitable as before or more profitable than ever, there are still many things need to
be done.

Technical Analysis

Product Data Analysis


There are four statistical tools available for Zynga which are Flurry, Localytics,
Mixpanel, and Google analytics for mobile. Take Flurry for example, it provides
strong statistical functions. After years of accumulation of technology and product
iteration, SDK flurry is very stable statistical background function. Other strengths
include: supporting the application tools; unlimited custom time; funnel analysis;
user grouping analysis; cohort analysis; custom reporting advanced payment
function. (Habgood & Overmars, 2006)
There are usually several questions Zynga should frequently face.
* Architecture
Architecture is designed based on decision model of SNS or MMO, different
characteristics of different architecture. Users are the partial real relationship
between chain game players, so position is not important to the game players.
* Single-threaded or multi-threaded
Single thread execution has only one principal line, which is easy to be tracked,
adjusted, and located; however, it provides much better performance. So Zynga
uses multi thread when it necessary and minimizes the needs of complicated and
time-consuming interaction between threads under using.
* Script

Regard to server side, the demand for the script from game players is really high,
basically, Zynga chooses the mode of C/C++ framework, the main logic is written
using C/++, script is used to do some local expansion.
* Network communications
There are usually two types of network communications for game companies: one is
to tie together with the game server, the other is to strip the network
communication from the game server, provide a message as a unit, and be capable
for intermediate service.
Zynga uses the second option because it simplifies the processing logic game
server and reduces the difficulty of programming. After years of operating, Zynga
has proven this mode is easier to enhance the background processing performance,
and the optimization of different parts can be independent.
* Game communication protocol
Generally, there are two kinds of agreements, text protocol and Binary protocol. Text
protocol has better version compatibility but worse efficiency. As a matter of fact,
game launchers always do the best to ensure games are compatible to most
platforms. This is a big challenge for operators as binary protocol is not intuitive and
the compatibility process is relatively complex as well.
* Network synchronization
Three-step rule is Zyngas usual approach. First, to probe game players network
quality; then, to clock synchronization between the game players and server
machines; third, to create synchronous mechanism based on the game features.
* Performance benchmark
Performance benchmark includes client and server, including benchmarking the
target market. With the help of server, Zynga can analyze the amount of users it
can afford. For example, a single physical server of 1 CPU and dual core, with the
average consumer traffic of 12-20Kbps, could support around 4,000 online users.
* Code reuse between different projects
Code reuse is effective whenever Zynga is developing or launching several projects
simultaneously. In order to expand capability, Zynga uses process data to ensure
service and adequate tools; and meets the requirements.
(Habgood & Overmars, 2006)

Statistical analysis

Channels, such as advertising platforms, limited free of charge, and integral


promotion form free wall, are developed rapidly for game companies. Take the IOS
platform for instance; numbers of channels could be put in at the same time, each
channel to bring the calculation and analysis of the actual number of active users,
as well as the single user acquisition cost. (Moore & Novak, 2009) Furthermore, the
key ratios, such as customer retention rate, payment rate, are helping with
feedback analysis of promotion strategy. As a matter of fact, the market has
emerged in a number of IOS platforms for statistical channel tracing analysis tools,
as they provide a concise statistical code, help realize the tracking data IOS
application download without an embedded SDK, and they help realize the simple
analytical functions. In general, Zynga needs to complete the following two steps to
generate effective statistical data:
* The use of statistical tools to generate channel promotion code
* To provide the corresponding channel in the application built into the statistical
code
(Moore & Novak, 2009)

Third party channels analysis


Some tools are provided by third parties which could be done by advertisers, app
developers, and advertising platforms. They often own data based on statistical
platform and derived channel effect analysis products, some of which need to be
paid for use.
* Tapstream: The leading direction is to help developer statistics from the web
promotion effect. Although apps provide a large number of traffic sources for mobile
phones, there are still a lot of Web channels because of the higher price of apps.

(Tapstream, 2013)

The integration of Tapstream requires two steps: one is to embed the statistical
code in promotion website and the other is to embed in application of SDK free.
Meanwhile, the Tapstream also provides no way to integrate SDK free. This platform
provides several free trial days after that there is a need to charge different users
accordingly. (Tapstream, 2013)

* Bit.ly: Is the one of the most popular short link services. Bit.ly helps game
companies by allowing them to view the clicks on the link information daily. Zynga
could generate channel statistics through this method to better analyze trends;
although this approach is simple, it is very effective and easy to implement for a
company. (Habgood & Overmars, 2006)

Advertising platform analysis


Those tools described above are useful to advertising platform of accumulating data
and experiences in the advertising business and are very suitable for Zynga
products. However, because these analysis tools are launched by an advertising
platform, the data could have been decorated to some extent. Therefore, Zynga
must use different channels of analysis to compare their data trends, as it provides
a better, unbiased view of the data.
Throughout the development history of online games, the general path by now is PC
end game, PC website game, and mobile game or social game. Now along with the
competitive development of smartphone and tablet, what Zynga faces is the period
in transition from website games to mobile and social games.
In recent years, especially in the second quarter of 2013, there were at least 1,000
research and development teams working on more than 2,000 mobile or social
game products in the nation. The larger amount of gaming companies mixed with
the high development pace of the industry inevitably resulted in a plethora of
gaming quality issues. Zynga was very much a part of this trend, as it consistently
produced bad quality games. In order to save time and cut corners, Zynga
sometimes produced copied versions of popular games. This was a feeble attempt
to try a take some of the popular games market share; however, the results of this
strategy were mixed. In fact, the company was hit with multiple lawsuits stemming
from the accusations of copying games. Another disturbing trend found at Zynga
was that players would find game products made by Zynga that they would actually
like; but, 2 or 3 days later, those products would be immediately scratched. This
would leave customers confused and angry at the company, as they finally found a
concept they liked that was developed by Zynga.
Last but not least, Zynga is working on its technology stack. As they pointed out in
their 2012 Annual Report, they tried their best to improve the ability to handle
sudden bursts of activity over a short period of time, for the sake of higher levels
of performance and reliability to back up the development of the business. The
proprietary technology stack includes datacenter and cloud computing
management, which have shared code base network and cross-promotional
features and proprietary data analytics; as well as, the growth of both 2D and 3D
game engines across the mobile platform business along with high-level security
and anti-fraud infrastructure. (Zynga, 2012)

Marketing Analysis
Business Missions and Strategy
Zyngas mission statement is to connect the world through games.
Zynga's 2013 marketing objectives:
* Make Games Accessible and Fun
* Enhance Existing Franchises: continue to improve the leading games.
* Launch New Games
* Continue Mobile Growth
* Extend our Technology Leadership Position
* Continue International Growth
* Increase Monetization of Our Games
Source from Zynga Annual Report 2012
Price
Virtual Goods
Zynga provides free games to customers. However, Zynga provides virtual goods,
virtual currency, which helps players progress faster and improve their performance
in the game. Players can directly purchase these by credit card, in-game play, or
from a promotion letter. For instance, in the FarmVille game, after planting the crop
the player will have to wait for the crops grow which can take hours. Many players
do not want to wait, so they use a few dollars to help the crops grow faster. Virtual
goods are Zyngas main revenue. According to the 2012 annual report, virtual goods
accounted for 71% and 63% of online game revenue in 2011 and 2010, in which
online game revenue accounted for 94% and 96% of total revenue (Exhibit 9).
However, the number of customers who is willing to pay is much smaller than free
players. Less than 10% of users spend money into these items. Moreover, some
players resale Zyngas virtual goods to other players. They use other websites to
run these transactions and Zynga gains nothing from that. In addition, there are
many game hackers. They developed programs which can hack Zynga systems and
get advanced game features without playing money. These hackers not only cost
the company money but they also teach other players to do so, further endangering
the companys business model. Many games companies have faced the same
problems. The Internet is too broad and makes these problems much more difficult
to control.
Advertising

Zynga provides advertising services for marketers and advertisers to use its huge
customers base.
* Branded Virtual Goods and Sponsorships that integrate advertising while
playing the games
* Engagement Ads and Offers in which players can answer certain questions or
sign up for third party services to receive virtual currency
* Mobile Ads through ad-supported free versions of mobile games
* Display Ads in online web games that include banner advertisement
According to the annual report 2012, advertising revenue increased 226% from
2010 to 2011: revenue from in-game offers, sponsorships, and engagement ads was
$26.0 million and revenue from other advertising activities was at $25.6 million.
Advertising is a great source of revenue for many social game companies.
Nevertheless, Zynga still has not figured out how to take advantage of this source
yet. According to the annual report, Zynga makes contracts with marketers and
advertisers for its game and depend 100% on these agencies. The company does
not set the advertising price as well as how much the clients pay for the ads. It just
received the dividend from contracted agencies; thus, Zynga has no relationship
with its clients. Zynga may think it is a game company and it is better to have a
professional company handle their advertising; however, the company would
extremely benefit from running their own advertising activities due to increased
revenues and better relationships.
In Zyngas games, it is easy to see Coca-Cola, Amazon, McDonald's and Walmarts
logos (Exhibit 10). They are big companies and long-term contracted clients. If the
company does not establish good relationship with these companies, it will be really
hard to increase its revenue.
Exhibit 9 _ Zynga Revenue

|
|

|
|

|
|

|
|

|
|

|
|

|
|

| Year Ended December 31,

| 2010 to 2011

| 2009|

% Change

% Change

|
|

| 2011|
|
|

|
|

|
|

| 2009 to 2010

|
|

| 2010|

|
|

| (dollars in thousands)

Revenue by type: |
|
|
|
Online game
|
|$
|%
|

|
|$
| 85,748

Advertising |
|
|
| 35,719
|
|
|

|
|

Total |
|$
| 121,467

|
|

|
|

|
|

|
|

|
|

|
|

|
|

|
|

|
|

|
| 85

|$
|%

| 574,632
|
|

| 1,065,648 |
|
|
|

|
| 570

| 74,452
|
|

|
|

|
|
| 226 | %

| 22,827
|
|

|
|
| (36 | )%

|
|

|
|

|
|

|
|

|
|

|
| 91

|$
|%

| 597,459
|
|

|
|

| 1,140,100 |
|
|
|

|
|
| 392 | %

|
|$
|

Source: Zynga Annual Report 2012


Exhibit 10 _ Advertising in Zynga Games

Products
Facebook games: Hidden chronicles, Bubble Safari, CastleVille, Empires & Allies,
CityVille, Zynga Poker, Pioneer Trail, Words with Friends, Mafia Wars, Caf World,
FarmVille, YoVille.
Mobile Games: Drawing Something, CastleVille Legends, Zombie Swipeout Free ,
Gems with Friends, Matching with Friends, Words With Friends, Scramble With
Friends, Hanging With Friends, Zynga Poker, Dream Zoo, Chess With Friend, CityVille
Hometown, FarmVille Express, Drop 7, Dream Heights, Dream PetHouse, Slots by
Zynga, Ayakashi: Ghost
Other Platforms: CityVille, Zynga Poker, YoVille.
Zyngas leading games are FarmVille (27% of online game revenue), CityVille(13%),
Zynga Poker (15%), and FrontierVille (15%). Zyngas product problem is that the
company did not focus on building its original games. Most of Zyngas current
games were bought from other game developers. The gaming industry is changing
rapidly in order to satisfy customers. If a game company does not build its own
game, it cannot compete in this industry which thrives on innovation. Moreover,
Zyngas negative net income will no longer allow the company to purchase games.

The gaming industry is mostly driven by creativity rather than producing the same
thing. Zynga has made many additional versions for its old games; but, sequels
hardly ever produce the same amount of revenue as the first editions. Competitor
Electronic Arts Inc. has made money producing the same thing. Nevertheless, EA is
able to do that by using its powerful brand and targeting a more simplistic
demographic. Zynga does not have enough brand recognition execute this strategy.
Zynga has been struggling with so many lawsuits. In early 2013, Electronic Arts
sued Zynga for copying its game, The Sims. Zynga sued EA back for stopping
employees from switching companies. At the end, both companies agreed to a
settlement (Thomas, 2013). Once again, in October 2013, a private settlement was
made with Bang With Friends over two games: Words With Friends and Chess With
Friends (Gullo, 2013). Even though Zynga was able to solve all of these lawsuits and
information about those agreements was not made public, the companys
reputation still took a hit. Customers seemed to question its game developing
ability, with many customers abandoning their games. On July 2013, Zynga
announced that it had lost 45% of its daily active users. In addition, the number of
monthly users also dropped significantly from 4.1 million in 2012 to 1.9 million in
2013 (McWhertor, 2013).
Promotion
Zynga is using cross-promotion marketing strategy. The main places where Zynga
promotes its games through social networks: Facebook and Twitter. When players
joined the game, he or she would send and ask their friends joining the game, so
they can get a gift. Thus, when a person plays Zyngas games, the company would
get more than 1 customer. As the result, Zynga built its strong fan pages through
word of mouth.
Also, Zynga has hosted many online and live events to involve its fans. The
company worked with many celebrities, such as Lady Gaga. Via these channels,
Zynga stays connected with fans and make people talk about its games. Moreover,
Zynga has used Zynga.org to show fans its social responsibilities and to make a
good reputation among the industry.
Place
Zynga is using online advertising, mainly Facebook page. Facebook has been
Zyngas primary distribution and advertising site. The majority of Zyngas revenue
was generated from the Facebook platform. According to the annual report 2012,
71% and 69% of Zynga accounts receivable in 2011 and 2010 were earned through
Facebook. Facebook is strong tool in marketing; however, there are also many
disadvantages for Zynga to work with Facebook. The problem with Facebook is that
it is a social network site, not a specialist games platform. Not all Facebook users
are game players. With the deal with Facebook, Zynga was able to grow
significantly. Any player who plays a social game, his/her friend feeds would appear

a message promoting the game. This feature had helped build Zynga brand
awareness among Facebook users. However, many non-players felt annoyed
because of this feature and they complained to Facebook about it. As a result,
Facebook had to take that feature out. Right now, a user playing a game does not
appear on their pages or their friends feed.
Another reason for problems at Zynga was that they were too dependent on the
Facebook platform. From the beginning, Zynga was very focused on developing
Facebook games. Zynga had made an addendum with Facebook and their current
deal. The addendum demonstrated that Facebook would control the promotion,
distribution, and operation of Zynga games through the Facebook platform and
players had to use Facebook Credits as the primary payment method. Facebook is
required to remit to Zynga an amount equal to 70% of the face value of Facebook
Credits purchased by our players for use in our games. This addendum with
Facebook expires in May 2015 (Zynga Annual Report, 2012). Zynga noticed this
problem and the company was trying to develop its own platform to get out of
Facebook, but it was not successful as the company expected. Furthermore, it hurts
the relationship with Facebook. In December 2012, new agreement with Facebook
was made, Facebook will no longer guarantee Zynga certain web or mobile growth
targets in exchange for continuing to invest in games on the platform. Facebook
also will no longer be prohibited from developing its own games. The moment the
agreement between two companies is revealed, Zynga stock price dropped 12.6%
to $2.29 (Glasser, 2012). Zynga overestimated the power of Facebook. Facebook is
still dominant in the social networks, and Zynga did not have the capability to live
on its own.

Human Resources

The Issue at Hand


It is no secret that the gaming industry is very competitive and fast pace. Due to its
nature, industry companies require innovative and talented employees that can
work at the same pace as the industry. Zynga knew that if it wanted to keep its
competitive edge they needed to be innovative in their gaming development at a
faster pace than their competitors. Zynga and most of the gaming industry tends to
have what most call a meritocratic culture, where individuals are promoted based
on their talent and achievements (Merriam Webster, 2013). Rewarding employees
for their efforts doesnt sound like a bad work environment, but unfortunately in its
efforts in trying to stay ahead of the competition, Zynga took this system to another
level. They began to develop the reputation of creating an uncompromising work
culture for its employees where they worked long hours without additional
compensation and given stressful completion deadlines. In addition, the company

fostered a very heavy metrics focused system where managers constantly tracked
employees progress and those who were considered weak employees were either
demoted or let go immediately (Rusli, Evelyn, November 27, 20011). For those who
performed at high levels, they were rewarded with lavish gifts such as vacations and
$100,000 in vested stock. The issue was that there were more penalty measures
than rewards in the Zynga work environment. In March 2009 Zynga hired new HR
people officer who created a new hiring structure and fired about 30 employees by
the beginning of the summer that same year. It was also rumored that Mark Pincus
kept an M.I.A (missing in action) list that helped him keep track of the senior
employees who held high equity in the company and were not performing well or
needed more ambitious projects. In that same 2009 year, the company began to
reduce employee equity packages. Higher management level employees who were
not performing at the companys standards, they were given two options, which
were to either take different positions with the same salary but with a lower equity
package or leave the company.
Some employees can handle this type of stressful environment, but others cannot,
especially after working in this environment after a couple of years. Zynga surveyed
its employees regarding their work satisfaction. To former CEOs, Mark Pincus,
dismay, the survey results from 1,600 employees indicated that they were very
unhappy with the company and some even indicated that they planned to leave and
cash out from the companys stock as soon as there were public offerings. In
addition, many employees indicated that Mr. Pincus tended to have many loud
outburst and emotionally charged encounters that broke employees down, some
would even break down into tears (Raice, Hayndi, January 17, 2012). Pincus
behavior was of no surprise to many because of his background. Pincus was a
Harvard Business School graduate who had spent many years working in the
competitive Wall Street environment. This type of high pace and pressure driven
environment seemed normal for him in order to succeed in any industry.
Unfortunately, this work environment also caused the turnover rate to increase and
in many instances lead to a loss of good talent in Zynga. Not being able to retain
talent can be an issue for the companys game development and its investors
because high turnover rates tend to look very bad to stockholders and be very
costly.
The Gaming Industry Employee Culture:
In an interview, Zyngas CEO, Mark Pincus, was asked about the companys culture
and its negative reputation, he pointed out that their 3% attrition rate was low
compared to the average Silicon Valley 14% attrition rate and an indication of their
company being liked by its employees. Furthermore, he stated that Zynga was very
competitive due to the industry that they were in and the level of competition within
the company was not unusual in the field (Raice, Hayndi, January 17, 2012). Mark
Pincus did make a good point about the industry being very competitive in nature.
In fact, the gaming industry seems to have a similar work culture as to the

entertainment industry and New York investment banking industry, where they treat
their employees / talents very poorly and make them feel as though they are
disposable if they dont perform at top managements desired level. This is
definitely a very high pace and high stress environment. Working with the fear of
getting fired every second of ones day is a thought behind most employees who
work in this type of unhealthy work environment.
Furthermore, Mark Pincus also stated in the interview that more that 60% of their
work force has gotten some sort of promotion every year for the past three years.
Some employees (15%) move up in as short of time as three months. Their
meritocratic system rewards hard workers and provides upward mobility within the
company. In addition, Mr. Pincus has admitted to having the MIA list at the beginning
of his career at Zynga to help remind him of the employees that need help finding
large projects/missions. He saw it as a way to help his employees as opposed to the
way the media portrayed it to be as a way for him to keep an eye on the
underperforming employees who were perceived to be future liabilities to the
company. In addition, he also stated that the reason he decided to reduce higher
managements equity plans and offered them different level positions because the
company was growing at a very fast rate and to a certain degree also outgrowing
the senior leaders management capabilities. Adjustments needed to be made in
order for the company to grow with the proper management. Unfortunately, based
on the companys current financial state, this adjustment didnt have the intended
results (Raice, Hayndi, January 17, 2012).
Although Zynga has gotten a very bad reputation for its employee treatment and
work culture, some current and former employees have reported positive things
about Zyngas work environment. Current employees have stated that Zynga is a
very flexible and accommodating place to work in. For example, a current employee
asked for time off in order to pursue his music career and his manager granted him
permission to take the time off and assured him that his job was going to be
available upon his return. Due to the fact that Zynga was very flexible and
supportive of his decision, he felt inclined to work on projects when he was on the
road and technically on vacation (Nieva, Richard, July 5, 2012). This is also an
example of how employee motivation and job satisfaction increases when their
employer is flexible and accommodating to them.
Positive feedback from Zynga employees is also heard. Other employees indicate
that they were initially drawn to work at Zynga because compared to their previous
positions in the same industry, Zynga seemed to be interested in making a change
in the world and having a vision as opposed to other companies that are only
interested in making money. Because of this, potential employees feel as though
they are going to be part of something bigger and venture into innovative projects.
Furthermore, this Chief Engineer also indicated that he continues to work at Zynga
because he is still happy with the leadership. He does acknowledge the issues that
have surrounded Zyngas management team, yet he thinks that as human beings

we are not perfect and beyond those personal issues, the company still focuses in
making their company the best. He is very happy with the technology that Zynga
builds, its bright engineering teams, and their openness for continuous
experimentation and risk taking in the industry (Roussos, Kostadis, June 2012).
How the Workplace Culture Affects Zynga:
A companys work environment tends to has a great impact not only on its
employees, but also on the companys overall wellbeing. Organizational culture
encompasses a companys values, vision, norms, systems, beliefs and habits.
Culture is part of the companys essence and soul. If the culture in a company is
negative, this will have a negative impact in the workers, which will then transfer to
the clients and the companys shareholders. If the culture is positive, it will have a
similar domino effect with its employees, customers, and shareholders. Zynga was
very innovative in the beginning and was paving the way to new territories that
other companies had not discovered, which allowed for the companys employee
culture to be more flexible and accommodating to its employees. The company then
grew and got very successful which placed stress on the company to maintain its
success and thus they intended to adopt a very competitive meritocratic system in
the organization in its attempt to maintain its industry leader status. Unfortunately
this seems to have backfired on Zynga and created an internal negative
organization culture that as a result has cost them good talented software
developers, profits, lawsuits, collaborative deals, and shareholders support.
One of the major concerns related to Zyngas negative work culture on the
employees is the loss of talented employees. Even though Zynga is good at
attracting and hiring some of the most talented and creative software engineers
(Reynolds, Brian, February 2013), their negative work environment full of unrealistic
deadlines and cutthroat environment causes them to leave the organization. In
these industry creative and talented individuals, or as some call it talent, should
be made feel comfortable and supported by the company. When an employee does
not feel the company is looking out for their well-being or appreciating their efforts,
they will not trust the company and as a result leave the company. As competitive
as the industry might be, many employees, including those who have been in the
industry for many years, cannot survive the stressful environment that Zynga has or
can only endure a couple of years before they reach their burnout points. Also,
when these talented employees leave the company, they take a significant amount
of company insight and take it with them to other competitor companys. With this
information these former Zynga employees have the potential of using it
strategically create better products for the competitors or give them insight on
Zyngas future innovative projects. This is something that is common in this type of
industry and Zynga has had to take legal action against former employees who
have done this. It is important for companies like these to have good
communication between the IT security and human-resources department so that
they are able to track the individuals who are going to be laid off and make sure

that they dont take any confidential company information with them before they
leave (King, Rachael, October 2013). In conclusion, losing good talented employees
causes Zynga to also lose potential production of innovative products, which is what
differentiated Zynga in the social gaming industry and gave it success initially.
As previously mentioned, if Zynga does not have talented personnel to develop
great games for the public, this will inevitably affect their profits. The company is in
very bad shape financially partly due to its negative institutional culture and weak
management. In addition to not being able to produce the same quality of games
that they used to produce, they are also losing money through employee lawsuits.
Due to their unhealthy work environment, many former employees have taken legal
action against the companys unfair labor practices and failure to pay overtime to
the employees (Weingarner, Beth, August 2013). In fact, on July16 a class action
lawsuit was filed against Zynga by several of its former employees with the same
complaint (Huff, Steve, August 2012). Furthermore, these negative encounters are
observed by the public and thus affect Zyngas sales.
Moreover, the negative press associated to Zyngas poor work environment and the
baggage that it carries with it causes unhappy employees, lawsuits, and loss of
profits, tremendously affects Zyngas collaborations and business deals. For
example, in July 2011 Zynga lost the bid for PopCap, a mobile gaming company,
because PopCap creators were worried about Zyngas bad reputation. Even though,
Zynga offered them $950 million dollars in cash, PopCap opted to sell their business
to Electronic Arts who offered them $750 million dollars in cash and stock options
(Rusli, Evelyn, November 27, 20011). Allegedly PopCap heard rumors from a reliable
Zynga source of the companys decrease in share awards and intense competition
within the company and was very discouraged to make a business deal with Zynga
after hearing the rumors.
Lastly, Zyngas negative reputation raises major red flags for the companys
stockholders. Many stockholders were concerned when they noticed that the
company had problems retaining employees and are involved in various lawsuits.
This is a complete turn off for both potential and current stockholders. After all of
this negative Zynga press and for some who witnessed these issues personally in
the company, many stockholders, both employees and non-employees, waited
eagerly to be able to cash out their company stock and invest their money
elsewhere. In this scenario, the stockholders knew that Zynga was not going to be
able to maintain long-term success with all the turmoil that they had with their
employees and company as a whole. When stockholders remove their money from
the companys stock, the company loses money and tends to affect them both
through their finances and their brands reputation.
What Zynga is doing to change the culture in the workplace:

Zyngas awareness of its negative oppressive work environment reputation and the
negative the negative impact this was having in the companys profits, it instilled
change in the company by top management. Changes at the employee and
management level were made under different administration. Under Mark Pincus
administration most of the changes were made on the lower employee levels. After
Mark Pincus left the company and Don Mattrick took over, he made a combination
of higher management and lower level employee system changes.
Mark Pincus attempt to fix the companys work environment was primarily by trying
to ease the workload on its workforce. He added data centers and expanded teams
to ease the workload on the engineers. In addition, he also encouraged managers to
give employees a little down time between projects and a whole week off before
their games debut to avoid burnout. In addition, the company invested millions of
dollars on leadership training programs that included focus groups and other
methods for the managers. Moreover, Mark Pincus did some self-reflection on his
management style and attempted to soften and refine his management approach
by getting a coach who assisted him with his message delivery tone and using
constructive feedback towards his employees. He also hired an outside company to
do a 360-degree review on him to provide feedback and suggestions. Furthermore,
Zynga kept their already established on site employees pampering perks such as
acupuncture, happy hour Fridays, and organic cafeteria food (Rusli, Evelyn,
November 27, 20011).
When the new Zynga CEO, Don Mattrick entered the company, his revamping
approach consisted of restructuring top-level management. Don Mattrick wanted
top-level management to be more involved and hands-on with product and game
decisions. This was implemented across three areas of the company, the studios,
technology engineering, and functional areas such as the legal and human
resources departments. According to some of the current Zynga staff, thus far this
new restructuring and accountability system has been having a positive impact on
the companys work environment (Cutler, Kim-May, August 2013). This illustrates
Zyngas resiliency trait that they are known to have. Zynga and its employees have
built a reputation of being able to quickly adapt to changes in the company, which
make it one of the cultures greatest strengths. With the culture transformation that
the former CEO, Mark Pincus established before leaving the company and the new
leadership of Don Mattrick, Zyngas human resource issues have the potential of
improving.
Management

Overview
Management at a company is one of the most important factors to focus on when
analyzing a companys performance. Decisions by management, especially in a

centralized business structure, are extremely important as they decide which


strategic direction the company will head in. Management that is able to optimally
utilize resources and put it towards a strategic goal will often lead to a successful
company. Management will also dictate the culture of the company, as employees
will follow the example set forth by the managers. Management is responsible for
making all parts of the company coexist and work together; without a strong
management team, the company will struggle to be successful.
Upper management at Zynga has made some questionable decisions in running the
company. The continued drop in stock price since their IPO and their failure to
produce more hit games is a direct result of poor management skills and decisions.
Failed acquisitions, no official long term direction, and a lack of innovation in the
workplace are just more examples of the many problems that have caused Zynga to
spiral downwards. Former CEO and founder, Mark Pincus, has struggled to retain top
talent due to his management style and the makeup of the company. With so many
problems focused just on the core of the business, Zynga will continue its path to
becoming obsolete within the next few years unless some tough changes are made.
Problems in Management
In analyzing the decisions made by top executive and founder, Mark Pincus, many
problems within the company can be brought to light. In the beginning, Pincus was
viewed as an entrepreneur that had capitalized on the growing social media market.
Zynga developed big game hits such as Farmville and Mafia Wars, games that were
exciting and were able to grow large fan bases. He also built a strategic partnership
with Facebook, which allowed Zynga to be the number one supplier of social media
games throughout the world. While the early success was an amazing start to a
promising company, the major pitfalls of Pincus and what he had built had yet to be
seen. Zyngas relationship with Facebook was a genius first move, as both
companies profited from one another. However, Zynga failed to expand and deliver
their games for different platforms and their reliance on Facebook as a platform for
their games was made public when Facebook ended their exclusivity ties with Zynga
in 2012. (Constine, 2012) The end of this exclusivity agreement marked the start of
the decline for Zynga, who clearly did not have another option when Facebook
backed out on them. This strategic mistake put Zynga in troubled waters, as the
company has continually faltered at regaining the large user base lost through
Facebook. While this is not the only problem that is affecting Zynga, it is important
to note that Zynga is still searching for ways to access new users without Facebook.
(Rusli, 2013)
Another issue that Pincus has created is a culture that does not foster creativity or
innovation for their games or platforms. New games that have been developed and
released to the public have mostly been flops. Zynga has been unable to produce a
major hit like Farmville and previous workers have complained about how Zynga
stifles creativity. Managers at Zynga have been known to reject ideas that do not

follow the mold set forth by the previously successful games. Games that have been
put out focus only on earning the company money. Zynga no longer creates value
like they had in games like Farmville, a game that was able to keep users coming
back for more. (Farivar, 2013) The inability to retain long term customers is
troubling for Zynga, especially since the company will have to keep generating new
customers for each game. If Zynga was able to generate long term customers, it
would open up opportunities for sequel games because they would already have a
loyal consumer base. The company has also been very slow to adapt to changes in
technological advances. Zynga has not adapted to the growing use of mobile
phones as a platform for gaming. (Farivar, 2013) The slow move into the mobile
gaming industry is a direct result of the lack of innovation at the company. Once
again, Zyngas management team has their developers working only on models that
they approve and know such as the Facebook platform. Even if the developers have
great ideas to adapt to the new technological advances, the ideas are often pushed
aside by management. What is even more disturbing is that the mobile apps that
Zynga does have out are actually outgaining the Facebook games the company has
out. (Shontell, 2012) Zyngas refusal to focus on the developing mobile platform is a
critical mistake by management. The culture created by Pincus is a poor fit in an
industry that was built upon innovation. Zynga must find ways to change their
culture and foster creativity in order for them to compete with other game
developers.
Mark Pincus and his top executives have also made a crucial mistake in focusing on
short term gain while not fully committing to any long term goals. Zynga has no
true identity, as they have bounced around from social media gaming to real money
gambling. Their focus on short term profits has backfired rapidly since the company
went public. The company has steadily lost users, with their total daily user base
dropping to their lowest point ever of 39 million users. (Farivar, 2013) Zyngas early
success caused its management team to expand the company too quickly. The
company has lost sight of developing successful games, the main factor that led to
its early rise in the gaming industry. Zynga needs to establish long term goals
before they can get back on track. The establishment of long term goals will benefit
both the small employees and the big executives at Zynga. The goals will help
define what roles each employee needs to play and how important their parts are to
the success of the company. Management that better understands the long term
vision of the company will ultimately provide the company with better leadership
and direction. The importance of avoiding short term thinking is very evident and
Zyngas management team should act quickly in analyzing and setting long term
goals so that the company can succeed once more.
Zyngas failed acquisitions, most notably the purchase of OMGPOP, can be put upon
the shoulders of Mark Pincus and his management team. After the company had
achieved its first taste of real success, management decided to purchase rival
gaming companies to eat up more market share and put Zyngas name out on more

games. While this idea has its merits, a company that pursues this strategy must
make sure that have fully researched and identified companies that will continue to
improve Zyngas line of games. In the case of OMGPOP, Zyngas former COO, John
Schappert, obviously did not research enough to see that this company was not
worthy of the high price tag of over $200 million. Almost immediately after Zynga
acquired OMGPOP, the hit game Draw Something seemed to have hit its max user
count and it began to fall. (Kuittinen, 2012) Zynga ended up shutting down its
OMGPOP division and its game, Draw Something, after only one year of operation.
(Kuittinen, 2012) While the game Draw Something climbed to the number one
downloaded app at a record pace, Zynga should not have been fooled by its
dramatic rise to fame. There were a number of fundamental points that were
ignored by Schappert and the management team. First off, the team did not analyze
why games that were similar to Draw Something were not successful. In doing so,
the team would have figured out that Draw Something was not all that different
from the other games. Rather, it would seem that the company just put the game
out at the right time and marketed itself rather well to become a flashy new hit. The
second mistake made in this acquisition was that the company failed to analyze
how erratic the mobile gaming industry was in nature. The top charts were often
filled with new games each week, as users could quickly get hooked on a new game
each week. There was no real trend of any game sustaining a grasp on the market,
a point that should have immediately been a red flag to the management team.
(Kuittinen, 2012) Instead, management was sucked into the glamour of Draw
Something, which ended up costing the company over $200 million dollars through
acquisition costs and severance packages for the fired employees. The
management team took a huge gamble on OMGPOP, as the team was extremely
uninformed and unprepared to give the go ahead on purchasing the company.
In addition to the failure of OMGPOP, Zyngas splurge on other acquisitions was also
a strategic mistake made by Pincus and his management team. The multiple
purchases of other gaming companies backfired as investors saw this as
management trying to cover up for Zyngas inability to develop games, especially in
the mobile sector. Truth be told, Zynga had still not proven that they could create a
successful mobile game. Zyngas most popular mobile game, Words with Friends,
was actually part of an acquisition from developer Newtoy. (Shontell, 2012) With the
industry shifting towards mobile gaming, Zynga has been put in a really tough spot.
Zyngas poor track record with mobile gaming coupled with the investors doubts
due to the acquisitions has made Zynga look like an incredibly weak and
unprofitable company to invest into for the future.
One last problem with management at Zynga was that former CEO, Mark Pincus,
had an extremely tough personality to work with and some of his business practices
teetering on being unethical. Pincus was known to be a very intelligent man that
was ruthless when it came to making profits. (Griffith, 2012) His aggressive
management style was a huge turnoff for potential employees, as they feared that

his focus on numbers would ultimately be the deciding factor on how games were
developed and deployed. Pincus was a very animated manager and was not afraid
to have an outburst in front of his employees. Job security at Zynga was an issue, as
many employees felt that Pincus was not afraid to fire someone at any time. (Rusli,
2011) Pincus management style would ultimately be the reason for many talented
staff members to leave for a competitor that was more supportive and easier to
work with. While Pincus did try his best to address these issues by handing out
lavish rewards for the top performers in his company, he was never afraid to
threaten an employee with a demotion or termination for underperforming. (Rusli,
2011) In addition, top management at Zynga had also adopted Pincus management
style, causing friction throughout the company with so many aggressive managers.
Pincus business practices have also been brought to question by many employees.
Along with the threat of demotions and terminations, Pincus also engaged in
scamming users and questionable stock practices. Pincus admitted that when he
first started the company, he was committed to bringing in revenue. He was so
committed that he even had users download certain applications to earn Zynga
credits for games; however, he failed to tell users that these applications would be
difficult to remove from their computers. (Arrington, 2009) Pincus stock practices
have been brought to light recently, starting with his demand that employees give
back stock that were doled out instead of raises. Pincus even had a specific targeted
list of employees who he felt did not perform well enough to deserve those shares.
Some employees were given an ultimatum to give the shares back or risk being
terminated. (Raice & Scheck, 2011) Pincus also made sure that he would maintain
control of the company when it went public by offering different tiers of stock. Some
shares were much more powerful and worth more than others, especially the special
shares that Pincus gave to himself which were worth 70 votes each. This practice
scared off potential investors, as Pincus was already limiting the power of what
shareholders would be able to have a say in. Finally, Pincus was also hit with an
insider trading lawsuit in 2012, after he and some other shareholders sold around
$515 million worth of shares right before a bad earnings report came out. (Popper,
2012) Not only has Pincus practices been unethical; but, they have also opened
Zynga up to the possibility of lawsuits by employees and shareholders. Pincus
decisions have brought a level of uneasiness to Zynga, making it a difficult company
to choose to support.
Current Management Decisions and Ideas
Although management at Zynga has made some critical mistakes, the company is
still relatively young and is able to bounce back from these mistakes. Certain
changes to the managements executives, strategy, and structure will help move
Zynga into the right direction. In fact, Zynga has already made some promising
changes in 2013, as Mark Pincus has stepped down as CEO and has been replaced
by Don Mattrick who was formerly associated with Xbox and EA. The company must
trim their current payroll, as Zynga has expanded their reach too far and must now

shrink in size. The company must also reestablish their focus on game development
for the expanding mobile platforms and possibly more. Zynga must be ready to
adapt to these new challenges in their future.
The first step to correcting managements problems has already been put in place
by replacing Mark Pincus with someone with more business experience that has
proven success in the gaming industry. Pincus problems were well documented:
pending lawsuits; short term thinking; disruptive management style and
personality; questionable ethical practices; poor motivational tactics; profit before
creativity. While Pincus did put this company in a tough hole to navigate out of, he
was able to accomplish some amazing feats. He had the tenacity to take his small
startup company and turn it into a billion dollar company by making tough
decisions. Pincus also had a good eye for talent, as Zynga has been able to replace
many of the top executives that have left by promoting from within. The former CEO
is also responsible for giving back millions of dollars to the world through Zynga.org.
Finally, Pincus was willing to take a reduced capacity in the company by stepping
down from CEO when he found someone that was capable of turning the company
around.
Don Mattrick is an excellent choice for CEO as he is fully capable of turning around
troubled gaming companies and making them stars once more. Evidence of
Mattricks success can be seen with his refocusing of the Xbox from hard core
gamers to a family friendly console that can be enjoyed by both avid gamers and
casual ones. (Laporte, 2013) While Mattrick has not directly worked in the social and
mobile gaming field, his experience in management will be greatly valued. Zynga
has never brought in a manager like Mattrick, a man that knows how to manage and
produce innovative products. Mattricks history is rich with gaming firsts as he was
able to develop a motion sensor unit for the Xbox, play a main role in producing
Sims, and pioneer the first game that put a players point of view from behind the
wheel of a car. (Laporte, 2013) These distinctive characteristics and innovations are
main attributes that have been lacking at Zynga. Mattrick has also been known to
be very detail oriented, meaning that he is meticulous in his ways when he runs a
division or company. His attention to detail will be very important for the next year
as Zynga will be forced to overhaul their entire system to conform to Mattricks
design. Although Pincus has relinquished his role as CEO, he still has his positions of
Chairman of the Board and Chief Product Officer. There is the potential that the two
strong minded individuals will butt heads; however, one can assume that Pincus will
let Mattrick run the show. This can be deduced because he has already made the
sacrifice to charm Mattrick into joining the company. Furthermore, Mattrick will not
be reporting directly to Pincus. Instead, he will be reporting to the entire board of
directors, made up of a panel of business minded individuals that Pincus respects
and values for their opinions. (Laporte, 2013)
With Mattrick in as the new CEO, Zynga and investors must be ready for some
changes to occur in the structure of the company. One main change that Mattrick

has already implemented is that he is sharply trimming the payroll down. Zynga
once had over 3000 employees working on developing new products. The sheer
amount of people often led to an excess amount of employees working on jobs that
only needed two to three people to accomplish. Often times, product launches took
extended amounts of time because of all the extra ideas being thrown around on a
simple project. This delay in updates caused Zynga to lose out on gaining more
daily users and had the company paying more for a product that was not even
produced on time. (Farivar, 2013) Zyngas rapid expansion made the company think
that it needed more employees than it really did. Before Pincus departure as CEO,
he started to lay off people and closed offices as the stock price fell. While this was
viewed as an indicator of Zynga performing poorly, it is of strict necessity for
Mattrick to continue this trimming process. Mattrick should hold interviews with
developers and engineers, seeing which ones of the bunch are eager to start a new
chapter at Zynga. After Mattrick is done cleaning house, Zynga can then refocus on
becoming more of a true gaming company.
Zyngas strategy with Pincus was focused more on the short term payoffs of the
company rather than the long term future of the company. Pincus was very
concerned with revenue coming in immediately and this was done by making sure
that the daily user base continued to grow. While that outlook works as short term
perspective, it is critically flawed as a long term philosophy. Focusing directly on
making a profit will often lead companies to cut corners or provide low quality
products or services. This was extremely evident under Pincus, who was willing to
force his own users into signing up for bad products just for the sake of gaining
more revenue. Mattrick has the opportunity to learn from Pincus mistakes and
change how the company operates and thinks.
Mattricks first strategic move to make is to clearly define the long term goals that
Zynga is focused on accomplishing. The company should initiate a 5 year plan that
will set certain attainable goals for the future. Stock price should jump from the
current price of $3.80 back up to its IPO of $10.00-11.00. The company should also
see a bump in revenue from (ASK LANA). After setting the companys long term
goals, Mattrick can go about changing what the company focuses on. It is time for
Zynga to dive head first into the growing market of mobile gaming. Under Pincus,
the concept developing a line of mobile games may have been discussed; however,
the effort put into the development of those games was lackluster at best. Pincus
missed the ball on the mobile gaming market, as he was so consumed with the
social media gaming structures that got the company started. Luckily for Zynga,
Mattrick is excellent at developing innovative games and will quickly get teams
going on finding creative approaches to games for the mobile platform. Zynga has
not released a successful mobile game that has been developed in house, so
Mattrick must focus his employees on rallying around the new concept. His
attention to detail will again be put to the test, as the company will need solid
guidance throughout this rebuilding phase.

In order for Mattrick to successfully implement a change in Zyngas vision to mobile,


he must adjust the culture that was set forth by Pincus. The old culture stymied
creativity and innovation, forcing developers to follow the outdated models of
games that were successful years ago. Luckily, the developers that Mattrick has
kept will be the top developers of Zyngas workforce. More than likely, these
developers have already been thinking about ideas on how Zynga can transfer into
the mobile market successfully, they just need an opportunity for somebody to talk
and listen. The problem lies in that many of the developers were shot down under
Pincus regiment and may be unwilling or afraid to discuss new ideas. Mattrick must
be willing to sacrifice his time to get to know the workforce on a more personal
level, only then will they begin to really open up once they have seen that the
culture at Zynga has changed.
Other ideas that Mattrick should start to explore for Zynga is developing games for
platforms such as gaming consoles. Mattrick has plenty of experience with consoles
and it would definitely help Zynga out if they can expand their games to more than
just two platforms. Another idea is to make sure that Zynga is providing the best
possible experience for its users. Under Pincus, revenue was promoted as the most
important concept; subsequently; the company lacked in their performance in
simple areas such as customer service. Zynga should make sure that they provide
the intangibles such as friendly experts helping users out with troubleshooting. This
little change will increase the way consumers look at Zynga and will show that the
new change is for the better. Customers will flock back to Zynga if the company can
prove that they have increased the value of playing Zynga games.
Mattrick and Zynga must also think about taking over advertising for the company.
As of now, advertising has been contracted out to third-parties as stated in Zyngas
2012 Annual Report. This has created a direct rift between Zynga and their
sponsors, as the two parties have not been able to build or develop a relationship.
Since the third-party also negotiates the contract fees, Zynga has little control of
how the advertising is executed. Mattrick should look into creating an advertising
budget for the company to perform advertising on their own. The company should
hire out an advertising team and delegate a manager that will understand exactly
what Zynga is trying to accomplish through their advertisements and how it is
worked into their games. The company could cut out the middleman, giving a big
profit boost to the company. The company will have better control of where
advertisements pop up during gameplay, meaning they will be able to scale back on
obtrusive ads. This could easily build more value for their customers, as they will no
longer be bombarded with advertisements. One of Zyngas biggest competitors, EA,
completely controls the advertising for their company. This has paid off immensely
as EA found how to better reach their customers through in-game advertisements
and engagement. (Shields, 2012) This does not mean that Zynga should discontinue
their advertising and promotional relationships with Facebook, as Facebook is still
the top social networking site in the world. Rather, they should start small in

advertising by controlling their own site, slowly growing it so they can be less reliant
on Facebook. Zynga should take proactive steps in taking over advertising for their
company, as the benefits of doing so are great.

Solution Approaches
With the bad finance situation, down-to-bottom stock price, and loss of talented
people, Zynga has to be hyper-vigilant about all decisions to recover from the bad
situation. First and foremost, Zynga should focus on developing innovative games
instead of purchasing from others. On one hand, this can help Zynga differentiate
itself from rivals; on the other hand, its helpful to attract players by brand new
stuff by Zynga instead of the old same stuff. Zynga also has to release updates
rapidly of current games and launch new games quicker to maintain players as well
as growth. Secondly, Zynga should look to expand globally. The potential markets in
the Asian regions are huge, so if Zynga can earn some market share and adapt to
local preferences in Asian markets, it will be a savior to Zynga. Third, they must
improve their company culture and find ways to foster innovation to develop better
games. It is important to note that the gaming industry is very volatile, as change is
the only constant in the industry. With that in mind, the following solutions are
suggested for a two year plan to get the company back on track.
1. Developing Innovative Games
A. Products Content
Gaming is an entertainment channel. Most people play games for fun. If the game is
easy to play, anyone can play it. Zynga was successful attract many non-gamers by
this strategy. However, this strategy is no longer useful. When players become
familiar with the game and nothing new is introduced, they will find another game
to play instead. Many Zynga players said they games were fun and enjoyable at
first, but after a while they got bored. In addition, many gamers complained about
Zynga's customer service. Zynga did not listen to its customers as well as respond
for their request. Here is a quote from one of the customer: all fun games, but
Zynga needs to listen to the gamers. I loved the concept behind Pioneer Trail at
first. However, I soon got bogged down with hundreds of quests that are almost
impossible to finish. The constant pop up ads on Pioneer Trail is also annoying as
hell (Zynga Community Forums, 2013) Thus, developing new games is an
important key to keep the current players and to attract the potential new players.
Developing a new game is very important, but understanding the needs of
customers is more important. Instead of buying new games from other companies,
Zynga can use the current in company games developers to create new original
games. The game content also can be improved by market research. Market
research will provide important data about customers and the industry, so that the

company can identify what type of games customers will respond positively, and
what type of marketing tool the company should use to reach these customers. For
instance, customers tastes and preference has changed dramatically in the current
market. According to Entertainment Software Associations Essential Facts about the
Computer and Video game industry, player seems to develop interest with casual
and social games. Exhibit 11 and 12 shows that online puzzle and board games
decreased from 42% to 34% and mobile versions decreased from 47% to 35% in
2012 to 2013. On the other hand, action games and social games players increased
significantly. Furthermore, this report also indicates that women older than 18 years
old are more playing game than other segments. These facts show the different
views from the belief that men are more playing game than women. Traditionally,
companies divide customers into demographic groups. However, this strategy does
not work for the current game industry. The benefit segmentation is more suitable
to Zynga situation. This segmentation is based on customer benefits from the
purchase of goods and services. Based on the benefits that each of the segments
receives, the company will concentrate to engage with each of the specific
customers segments. Providing the right game to each segment will help the
company gain the most customers. The table below is an example of age
segmentation.

Exhibit 11_Types of online games played most often in the U.S


| 2012| 2011|
Puzzle, board games, game show, trivia, card games
|
Action, sports, strategy, role-playing

| 25.00%

Downloadable

| 13.00%

Casual, social games

| 19.00%

Persistent multi player universe | 11.00%


Other

| 9.00%

| 8.00%

| 42.00%

| 26.00%

| 34.00%

|
| 14.00%

*
* Exhibit 12_ Types of Mobile-games played most often in the U.S
| 2012| 2013|
Puzzle, board games, game show, trivia, card games
|

| 47.00%

| 35.00%

Action, sports, strategy, role-playing

| 12.00%

Downloadable

| 27.00%

Casual, social games

| 35.00%

Persistent multi player universe | 4.00%


Other

| 14.00%

| 13.00%

| 13.00%

|
| 4.00%

*
Sources: Entertainment Software Association 2012, 2013
*
*
* B. Develop mobile games
In 2012, 33% US players were playing games on mobile phones and 25% of them
were playing games on other handheld devices. In 2013, the number of mobile use
players increased to 36%. Online and mobile gaming is growing rapidly to become
powerful markets. Exhibit 13 shows the growth in U.S computer and video game
industry. Video games are decreasing from 10.1 billion in 2009 to 6.7 billion in 2012.
Also, computer games decrease from 0.7 billion in 2009 to 0.38 billion in 2012. On
the other hand, other delivery formats such as mobile games and social network
games are increasing from 5.4 billion to 7.7 billion. Exhibit 13 also illustrates that
physical format game is losing its market. Instead of that, digital format is getting
bigger and bigger. Although Zynga already has some mobile games, it still needs to
develop more mobile games.
*
* Exhibit 13 _ U.S Computer and Video Game Sales Growth
*
*
*

*
* Exhibit 14_ Recent Digital and Physical Sales Information
*

Not only in the U.S but also worldwide market, video games are losing its leading
position. Instead of that, mobile games are rapidly increasing. Exhibit 15 shows that
floating screen and personal screen are accounted for 25% of the global game
market. Especially, personal screens or mobile growth rates are far exceeding other
devices with 22% a year.
* Exhibit 15 The global Games Market per screen 2013
2. Expand to Asian countries: China, Korea, and Japan.
According to Zynga's annual report, Zynga's main revenue came from the U.S
market at 59%, and the international market contributed the rest. While Zynga's
market in the U.S tends to decrease due to all the incidents happening recently, the
international market is still rich. The Asia market is a promising land for game
developers.
The Asia online & mobile games industry has grown significant in the past several
years. China online game revenue is projected about 10 million this year, Korea's is
about 8 million, and Japan's is 2 million, while North America tallies in around 4
million. Compared to the 2% revenue growth of the U.S market in 2013, the Asia
Pacific region hit around 11% in revenue growth and the total revenue is accounted
for 36% of the global market (Exhibit 16). With the biggest population in the world
at 1.35 billion people, 84% of Chinese people are playing video games compared to
just 69% of the 313 million Americans (McDonald, 2013). A similar trend of shifting
to mobile games was also found in China. Mobile games are very popular. Niko
Partners 2013 Chinese Mobile Games Market Report demonstrated that China had
192 million mobile gamers in 2012 and this number will increase to 390 million in
2014. 79% of Chinese gamers play on a tablet and 57% of them play on a smart
phone. Moreover, Chinese players really like their games and they are very
generous in paying virtual goods. They spend most of their time on devices playing
and 67% of iPad and 63% of Android tablet Chinese users buy virtual goods. In
addition, Android mobiles are very popular in China; thus, the Asian market,
especially the China market can be the golden key to Zynga's crisis.
*
*
*
*
*
*
*

*
*
*

Exhibit 16 _ Global games market revenue

*
However, this market is very challenging market. According Digi-Capital, an
investment banking firm, game investments are primarily controlled by Asian game
companies. 8 out of 10 of the biggest mergers and acquisitions of game companies
are Asian companies, with most being Chinese, Japanese, and South Korean.
Gaming investment increases by 35%, reaching $876 million dollars. The volume
increases by 6% with the average investment deal worth around $6.6 million
(McDonald, 2013).
Zynga bought XPD Media, a Chinese game company, in 2010 and changed its name
to become Zynga Beijing. However, this office did not develop any localized games
since it was under Zynga's management. Furthermore, Zynga had many problems
in managing employees, especially when it came to top managers. Zynga lost it
China head director, Andy Tian, in June 2013 (MacMillan, 2013). After that, Zynga
hired John Yin to be the new head. Yin worked for EA for a long time and may be a
good choice for Beijing office in this crisis.
To be able to compete in these Asian markets, once again the first job that needs to
be done is market research. Asians have much different cultures, values, customs
and beliefs. Some games may work and translate over from the U.S., but often
times they will not work for this market. Zynga need to clarify who are its customers
and understand their needs.
About the promotion, Zynga needs to work with local distributors. In this market,
Zynga is still new to gamers. It will be hard to drive customers into Zynga's
platform. Therefore, it is better to use local platforms first, as they are already
established. Then, when customers know about the games, one can lead them step
by step to Zynga's platform. There are many big established platforms such as
iDreamSky, Yodol, and Tencent. Currently, Tencent is China's biggest game operator.
Tencent launched its Game Center of WeChat 5.0 in August 2013. 80,000 mobile
developers are using Tencent platform. A recent LinkedIn report shows that
Facebook will be no longer dominate the social networks. There are over 1 billion
users in Tencents WeChat, an astounding amount of users (Exhibit 17). Facebook
has admitted that its growth is getting slower and young users are leaving it
(Tappin, 2013). With the prohibition of Western social networks in China, Tencent is
the best channel for Zynga mobile games to debut in the China market.
* Exhibit 17 _ Social Networking and Messaging Services: Monthly Active Users
*

*
*
*

Data source from LinkedIn (Tappin, 2013)

3. Improve Human Resource Management and Company Culture


In regards to Human Resource Management in the company, it is advised for Zynga
to focus on creating a culture transformation within the companys work
environment. One of the major issues in the company is their inability to keep talent
due to their overly strict and micro managed environment. When Don Mattrick
entered the company he emphasized that top level management needed to be
more involved and hands-on with product and game decisions, along with a very
heavy coaching leadership approach. We would like to maintain Mattricks
leadership approach that has a top bottom, centralized management approach
because it has a lot of credibility based on his previous success track record. In
addition, we would like to compliment his approach by adding a transformation
leadership approach that can be taught to all management. In addition, the
company should aim at creating a robust corporate organization culture that
emphasizes healthy communication, trust, teamwork, and most importantly
flexibility as means to cultivate innovation. We will propose ways that the company
can enable this type of cultural transformation that will lead to a healthy work
environment for its personnel
A. Transformational Leadership
Mattrick has been very successful in the past building successful products,
partnerships, motivating staff, creating strong productive teams, and platforms in
companies. He is the type of leader who believes in motivating his staff to attain
their highest potential rather than creating an environment full of regulations that
dont allow flexibility in the work environment. He has a leadership style that would
be more in tune with what is known as transformational leadership.
Transformational leadership is leadership style that goes beyond ordinary
expectations by transmitting a sense of mission, stimulating learning experiences,
and inspiring new ways of thinking (Giffin, 2013). In a rapidly changing work
industry this type of leadership is good because it promotes adjustment to new and
unforeseen situations in the workforce. Transformational leadership has seven traits
that a very popular article once identified to be key in leadership (Labich, 1998).
These seven traits include trusting ones subordinates, developing a vision, keeping
cool, encouraging risk, being an expert, inviting dissent, and simplifying things. We

propose that Mattrick hire an outside consulting service that provides leadership
training that focuses on this transformational leadership style to train all of his
management staff. Although Zynga has previously provided leadership training to
his management staff, it didnt have this leadership approach. A good example of a
company that implemented this leadership approach is 3M. The CEO wanted to
make the company more efficient and profitable, while maintaining its leadership
style that promotes product innovation. They took on this leadership style and
applied it to their employee rewards system, overhauled procedures, and
restructured the entire firm (Useem, 2002). This approach worked very well thus far
for 3M and it has the potential to have the same effect on Zynga.
B. Robust Corporate Organization Culture
In addition to taking on a transformational leadership approach, Zynga should aim
at building a culture that is inspired by purpose, guided by values and rooted with
trust. In addition, the goal is to increase business outcomes related to innovation,
risk-taking, and employee loyalty and trust. A way to create this type of
environment is to create what is known as a robust corporate organization culture. A
robust corporate organization culture is one that has a leadership system that
emphasizes healthy relationships between staff by promoting open communication,
trust, teamwork, and continuous improvement in their work environment. In a
recent article in the Huffington Post, it was stated that in a recent study by the
Harvard Business School they found a correlation between robust, engaged cultures
and high performance in business (Seidman, 2013). This culture style has shown to
have credibility and a key factor in the success of many companies because of the
values that it promotes. A robust culture emphasizes four attributes: Trust,
Acceptance of failure, flexibility, and open communication (Cameron, 2012). When it
comes to trust, employees must feel comfortable with their coworkers and the
corporate innovation strategy. Acceptance of failure applies more to the leadership
in the company because the company leaders must be able to convey to their staff
that failure is acceptable without stigma, especially in this type of industry where
innovative development is a key to success. Furthermore, flexibility is highly
instrumental for Zynga to increase because the goal of the company is to create
innovative games in the industry and in order for the staff to do this they need
flexibility from their environment and leadership in order to be able to work from
home or where ever they feel more comfortable to generate good creative ideas.
Lastly, open communication between managers and staff needs to be established
so that managers are able to set the tone of their support for the innovation process
and establish deadlines for the projects.
There are many more things that Zynga can do to create a robust environment,
among these the ones we would like to highlight are creating a focus on
coaching/mentoring for the employees, regular employee brain storming meeting,
and providing learning workshops for its employees. Mattrick is a huge believer in
the power of coaching employees because he believes that coaching empowers and

inspires people to do their best work and build strong, productive teams. Mattrick
should implement an official coaching structure in the company where lower level
employees are partnered up with a higher-level employee (either in a management
position or not) and meet on a monthly basis to help each other. The managers can
initially meet with their staff to get an understanding of their capabilities to help link
them with suitable partners in the organization based on reciprocal responsibilities.
This coaching approach will foster positive developmental growth of each team
associate. In addition, they should have monthly meetings where all software
developers and key members of other departments such as accounting, marketing,
HR, and the legal department attend and discus new ideas. It helpful for employees
to meet and brain storm ideas along with members from other departments so that
they are able to get different points of views and assess the feasibility of their ideas
in holistic way for the company. Finally, Zynga should provide learning opportunities
for the staff and create a continuous learning culture that helps employees create
good innovative new products.
Furthermore, there are certain culture changes that were recently implemented by
Zyngas previous CEO that should be maintained. Mark Pincus emphasized
decreasing the workload on the game developers by adding data centers and
expanding teams and asked managers to give employees a little down time
between projects and a whole week off before their games debut to avoid burnout.
Zyngas established on site employees pampering perks such as acupuncture,
happy hour Fridays, and organic cafeteria food should be kept because it lets the
employees know that the company cares about them and is looking out for their
well-being (Rusli, Evelyn, November 27, 20011).
C. Employee Incentives
In the any innovative product driven industry, additional incentives need to be in
place as a way to motivate employees to create great products. Due to Zyngas
financial situation, the incentives that we propose cannot be to monetarily lavish.
First, Zynga should restructure their software engineers time where they are asked
to work on their assigned projects 80% of their time and use the remaining 20% of
their time for their own personal creative projects that they can present to the
company. With time, employees creative time can be increased if they show that
they are bringing in financially lucrative innovative products to the company. This is
an incentive given to the engineers that is beneficial to both the employee and the
company because the employee is able to have time to be creative and develop
what they are passionate about and the company benefits from the creations that
the employees bring to the table. In addition, employees should be given the
flexibility and option of working off site. Sometimes a fixed location doesnt allow for
creativity to flow and a change in environment can help employees get the creative
juices flowing in their brains. Another incentive for employees who produce
successful products is a vacation. The company already provides vacation
incentives and we would like to keep this because it compensates the employee for

its good job and also allows for the employee to relax, recharge and prevent
burnout. In addition, we would also like to maintain the monetary bonuses that
Zynga tends to give its employees, but not as expensive. We chose not focus on
giving company shares to the employees as an incentive because the company is
not doing well financially and thus this might not be perceived as an incentive to
employees; at least not at this moment. We would reduce the monetary bonus and
compliment it with another non-monetary incentive. In addition, all employees will
be given their basic healthcare and 401K benefits.
Finally, we believe that this cultural transformation will be very lucrative for the
Zynga. We recommend for Zynga to implement this approach in the company and
three months after its implementation, they should do employee assessments to
see who has been able to adapt to the new culture. Those who have not adapted or
refuse to adopt the new culture, they are to be fired from the company because by
not adopting to the new changes, they are slowing down the culture transformation
and being a financial liability to the company. Lastly, according to Gallups research,
all of the culture suggestions that were stated demonstrate to employees that the
company cares about their growth and as a result will allow for improvement in
employee performance, employee retention, and company growth (Abdallah &
Ahluwalia, 2013).

Conclusion
Poor management choices, an unforgiving company culture, and a steadily declining
user base have all been major factors in the downfall of Zynga. The company has
continued their decline from the gaming industry shortly following their IPO. The
company has strongly failed to live up to their lofty expectations and big spending
sprees, causing massive job cuts and tough losses in both talent and revenue.
Unrest within the company has caused employees to feel uneasy, as many will
wonder when their job will be next on the list to get cut. Luckily, Zynga has finally
decided to make changes to help bring them back to relevance. A new CEO in Don
Mattrick is a proven leader and successful gaming businessman. Reduced spending,
long term planning, and an influx of new ideas have all contributed to Zynga inching
closer and closer to their break-even point for 2013. Zynga will improve their
standing even more by developing in-house games, expanding to the markets of
Asia, and fostering a company culture that encourages innovation. With a push in
the right direction from their new CEO partnered with a renewed focus on mobile
gaming, Zynga may once again be a giant in the gaming industry within a few
years.

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