Zynga hopes to ward off rivals with games barrage

SAN FRANCISCO/NEW YORK Tue Oct 11, 2011 7:20pm EDT

Zynga CEO Mark Pincus speaks during the Zynga Unleashed event at the company's headquarters in San Francisco, California October 11, 2011. REUTERS/Stephen Lam

Zynga CEO Mark Pincus speaks during the Zynga Unleashed event at the company's headquarters in San Francisco, California October 11, 2011.

Credit: Reuters/Stephen Lam

SAN FRANCISCO/NEW YORK (Reuters) - Zynga is betting a new crop of games and a self-run Internet service will help it fend off rivals and reduce its reliance on Facebook as it prepares to mount a hotly anticipated IPO.

The company, which now dominates social gaming with aging titles like FarmVille, announced a slate of games on Tuesday to get into fresher territory from casinos to medieval landscapes. And it introduced "Project Z," a code-named fledgling service that will let gamers play through a Web browser without launching from Facebook.

Zynga hosted the rare media event at its San Francisco headquarters just weeks after the company showed a steep drop in quarterly profit.

Chief Executive Mark Pincus steered clear of discussing the IPO, but Zynga's first-ever large media presentation was a signal to analysts the company is taking Wall Street seriously and on track to go public.

"Zynga wants to let the world know they have a pipeline of games. The fact they are doing the press event and have never done one before is a harbinger of things to come," said Sterne Agee analyst Arvind Bhatia. "It's good these Zynga games are different, so players don't get a burn-out factor."

The company, which rose to prominence with "Mafia Wars" and "Farmville", filed for an initial public offering of up to $1 billion in July. But rough market conditions spurred by the weak economy have forced it to delay its debut, according to media reports.

Now, rivals ranging from the Walt Disney Co to Electronic Arts are making strides in social gaming, or casual games on the Internet that involve playing with a group of friends.

On Tuesday, Pincus unveiled several new titles including mobile game "DreamZoo" where players collect animals, a medieval-themed Facebook game called "CastleVille", and a bingo game set in Las Vegas. Another game, "Hidden Chronicles" allows players to search for concealed objects.

It also released games based on Facebook's new HTML5 technology that can be played on several devices, from smartphones to tablets such as Apple's iPad.

PROJECT Z

Apart from a dependence on "FarmVille" type games -- Cityville, released last year, is essentially an urban version -- investors worry Zynga is too beholden to Facebook, the main platform for its games and which takes 30 percent of revenue earned on that platform.

With 262 million monthly active users on Facebook, it has been adept at herding current players to new games but some analysts question how it can keep adding users on Facebook, where Electronic Arts and other rivals are coming out with successful games. EA's "The Sims Social" Facebook game now has more players than FarmVille, according to Appdata.

To help wean itself off, the company unveiled an online platform for players that executives said will be a direct-to-consumer experience called "Zynga Direct."

While Zynga did not provide many details on the embryonic Zynga Direct concept, it showed glimpses under the code-name "Project Z." The browser-based service will connect to Facebook, but games will not necessarily be always played on that social network.

"You can start a game on Facebook and can continue it on Project Z or vice versa, never losing your progress and continuing wherever you drop off," said John Schappert, Zynga's chief operating officer.

Zynga declined to comment on whether the platform would support Facebook credits, the social network's virtual currency in games.

Zynga is already trying to publish games for other platforms. Mafia Wars 2 -- the sequel to its popular Facebook game --debuted this week on Google Inc's Google+ in addition to a version on Facebook.

Like Hollywood studios, the publisher also needs to keep releasing new hits to sustain its growth.

After a months-long dry spell for new games, Zynga said in September that its profit dived to $1.4 million from $14 million a year earlier. Its sequential quarterly profit also fell more than 90 percent, from $16.8 million in the three months ended March.

Analysts expect the company to release its financial results for the September quarter in the next few weeks.

(Reporting by Alexei Oreskovic in San Francisco and Liana B. Baker in New York, editing by Robert MacMillan, Matthew Lewis, and Bob Burgdorfer)