Zynga has had an eventful week, announcing the acquisition of mobile developer NaturalMotion, the layoff of 314 people, and a projected profit for 2014, all of which has driven its share price higher by about 25 percent. We had a long chat with Zynga's COO Clive Downie about the game design implications of their acquisition, and also discussed some of the marketing and advertising possibilities ahead.
One of the immediate reactions to the news that Zynga has made a new acquisition is to recall Zynga's $183 million acquisition of OMGPop, the creators of Draw Something. That game was a swift-growing mobile game phenomenon in 2012 when Zynga bought its creator, and a year later the game had disappeared off the top game charts, Zynga closed OMGPop and took a big writedown. So inevitably the question arises: Could NaturalMotion be another OMGPop?
That seems unlikely, given the differences between the two companies. NaturalMotion has had several mobile game hits over a period of years, and the company has been in business a long time.”You're not wrong,” Downie agreed. “NaturalMotion's been around for over a decade, they have maturity in terms of their technology pipeline, maturity in terms of their creative leaders, maturity in terms of their ability to create hits. They have two hits already that are contemporary and in the marketplace.
“You and I have been in the gamemaking business long enough to understand that you look for experience,” Downie continued. “You look for fruit to have been born out of that maturity. NaturalMotion has that. We think their most successful days are ahead of them, both on the existing franchises that they have that can combine with our strengths in terms of breakthrough social and running live games, and in terms of bringing new products to the market using the continuation of that maturity of technology and gamemaking prowess.”
Aside from the NaturalMotion acquisition, one of the things noted in Zynga's earnings call was the strong perfromance of Words With Friends. This game, perhaps not coincidentally, also has a strong advertising component to it. Is the advertising business an important opportunity for Zynga in the future? One thing that's true with Zynga in 2014 is that its overall audience for games has been slashed from its once lofty levels. Is advertising still a viable business for Zynga, even with audience sizes down? Can Zynga turn mobile into a solid ad revenue generator the way Facebook has done?
“Words With Friends had its largest success in five years,” Downie said by way of explanation. “Words With Friends is a product that delivers very smart advertising into the gameplay experience. Advertising on mobile is something we do already and we're very successful at it in the right places. Using the lens of customer first, we will continue to make advertising decisions based on that. That might see additional advertising opportunities in future games, conversely it might see advertising reduced in future games. It's really all down to what's best for the customer and our long-term relationship with them. That's really what we're focused on, and its the core of all our decisions.”
On the other side of the mobile advertising coin, Facebook on mobile has been a good opportunity for many publishers to promote their products, and Zynga is among them. “Because of our scale we work with a large variety of mobile advertisers,” Downie said. “We use all aspects of the mobile marketing mix when we launch a product, including but not exclusively to Facebook advertising.
Some mobile game publishers like King are advertising mobile games on TV, now that the mobile audience has such a broad demographic. Is this something Zynga would consider? “There's a potential for it,” Downie answered. “We investigate all aspects of the marketing mix when we launch products, and if it's in the best interests of our customers. If we think it's something that's additive to a product's growth, we'll consider it.”