Word: zynga
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Dates: during 2009-2009
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...Zynga's tactic of gaming Facebook's architecture was critical to its takeoff. It flooded Facebook with ads. It exploited the social network's distribution engine to pepper players' friends with updates and invitations. To release games quickly, it used a roll-up strategy, buying YoVille, licensing Texas HoldEm (which it renamed zyngapoker) and imitating rivals. Playfish's Restaurant City was around before Cafe World, and FishVille is reminiscent of Crowdstar's Happy Aquarium. Even FarmVille rips off Happy Farm, a hugely popular online game in China (richly ironic, given China's disregard for intellectual property). Once it had collected...
Pincus calls these the "golden mechanics." He learned them by trial and error, mainly while working on his two failed start-ups, Tribe.net and Supportsoft. He also has a behavioral psychologist on staff. Unlike traditional electronic games, which can't be changed much after they're shipped, Zynga's games constantly evolve in response to users' preferences, so they're more habit-forming. "They're making movies," he says of console-based-game creators. "What we're doing is more like weekly TV programming...
...this, the company needed money and had to prove to investors that offering free games on Facebook was a sound proposition. Zynga attracted $39 million in start-up money and got a second wave of $15 million this month. Ads and virtual goods bring in most of the revenue. But because people who play free games on the Internet like the free part, Zynga needed a third income stream--product come...
...Zynga did not create the sketchy offers, which are outsourced, but neither did it have a handle on them. "We have always policed offers for content," says Pincus. "But there's thousands of offers and hundreds of new ones every week." Facebook and MySpace tightened their guidelines after getting complaints. Then a tech blogger confronted the CEO of a company that creates offers. She answered his accusations unwisely ("S___, double s___ and bulls___"), and it blew up online. Also on the Internet: footage of Pincus speaking at a University of California, Berkeley, event about how he funded his start...
...moment, Zynga has removed all offers and says it's going to vet each one before it appears. Whether this is just a speed bump for a company that's growing dizzyingly fast or a huge infrastructural problem is unclear. Reports peg Zynga's revenue at $100 million a year, which the company says is low. If you assume similar economies for Zynga as for Playfish, says Atul Bagga, an analyst with Think Equity, "Zynga could be four times bigger on a run-rate basis...