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How Do You Solve a Problem Like Zynga?

Fire the CEO? Fire most of the staff? Or just get some different creative fires burning?

Effie Y. / Flickr

Despite improving its once-shaky focus on mobile, Zynga’s Q4 earnings sucked.

Sales were $20 million short of what Wall Street wanted, and the company lost $2.4 million in the same quarter that rival King made $184 million in profit. Zynga shares lost 15 percent of their value between the closing bell on Thursday and the opening bell on Friday.

Now, analysts like BTIG’s Rich Greenfield are calling for CEO Don Mattrick’s head.

“Don: A lot of your mistakes around not enough testing and rushing the launch of new games appear very similar to the mistakes Mark Pincus was making when he was leading Zynga,” Greenfield wrote in a note this morning. “Why should investors have confidence in you and your strategy going forward?”

But would replacing Mattrick — who came over from Microsoft in 2013 to replace Zynga founder Pincus at the helm — really help?

“I think any management team would have a very difficult time fixing Zynga right now,” Cowen Group analyst Doug Creutz said in an interview with Re/code. “I don’t think it’s as simple as, you bring in the right person and fix everything.”

Still, Creutz said he expected 2015 to be the make-or-break year for Mattrick with Zynga’s board, as the company decides what direction is best for its future. In its earnings report yesterday, Zynga announced plans to further diversify its mobile games portfolio, entering the match-three and action-strategy genres to compete head-on with current heavyweights King, Supercell and MachineZone.

Creutz was skeptical of this strategy, which Zynga started last year with its $527 million acquisition of NaturalMotion, a deal that brought it into the mobile racing and “people” categories with NaturalMotion’s existing games CSR Racing and Clumsy Ninja.

“If you’re trying to do a turnaround in the steel industry, you have time,” Creutz said. “This industry is changing dramatically every month. You need to get the company from X to Y, and if Y is a year from now, you don’t know what Y needs to be.”

At the same time, the company tried to reinvent its classic franchises Words With Friends, FarmVille and Zynga Poker on mobile, with mixed results.

Mobile now represents 60 percent of the company’s income, which is good news as mobile games continue to grow to an expected $38 billion market worldwide by 2018. But a poorly tested and even more poorly received revamp of the Zynga Poker app was the company’s New Coke; legacy players hated the slower and more graphically focused game, and Zynga was forced to re-issue a “classic” version to sate them.

“Management has failed to explain” why Zynga focused on graphics over speed and simplicity, “which are paramount on mobile,” Greenfield wrote.

Creutz said Zynga might learn from two of the biggest mobile winners of 2014: Glu’s Kim Kardashian: Hollywood and Activision Blizzard’s Hearthstone. Both demonstrated the blockbuster viability of previously unproven types of games, rather than trying to compete with existing leaders like Candy Crush Saga and Clash of Clans.

It’s difficult, however, to encourage and create those breakout hits at a game company that has already had to lay off hundreds, as Zynga has, he said.

“Once you sort of hit that downward spiral of, ‘These games aren’t working, so we have to fire people and make fewer games’ — it’s so hard to get out of that death spiral,” Creutz said. “You need someone to come up with that big hit, and it’s hard to do that when everyone’s sitting around wondering if they’re going to get fired tomorrow.”

Greenfield advised, in addition to a management shakeup, that the company “fire the vast majority of Zynga’s employees and milk the substantial underlying profits Zynga generates.” In an email, he added that Zynga’s “biggest hope” under its current strategy is likely an upcoming title from NaturalMotion, Dawn of Titans, which a person close to the company said has been in development since before the acquisition last year.

Part of the problem, too, and part of the reason that focusing on proven and profitable hits might be safer, is that it’s so difficult to predict what the next big thing might be.

“Zynga has as much chance as anyone of producing a hit game,” Digi-Capital managing director Tim Merel told Re/code. “GungHo is a great analogy for how one mobile game can drive the success of a veteran games company.”

The “one game” Merel is referring to is Puzzle & Dragons, a runaway hit in Japan and elsewhere that has grossed billions for GungHo.

“Puzzle & Dragons transformed it 14 years after the company was founded,” Merel said. “Zynga is only seven years old.”

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