Zynga releases first mobile game since IPO

Thu Jan 5, 2012 3:36pm EST

The corporate logo for Zynga is seen on a screen outside the Nasdaq Market Site in New York, December 16, 2011.   REUTERS/Brendan McDermid

The corporate logo for Zynga is seen on a screen outside the Nasdaq Market Site in New York, December 16, 2011.

Credit: Reuters/Brendan McDermid

(Reuters) - Online game developer Zynga Inc is releasing a new mobile word game called "Scramble with Friends" on Thursday to expand its user base beyond Facebook and catch up with rivals in the handheld market.

Zynga shares have fallen below their initial public offering price since the company began trading on the Nasdaq stock exchange on December 16. On Thursday, the shares were trading at $9.04, about 10 percent below the IPO price.

While Zynga was one of the earliest game makers on the Facebook platform, it lacks that first mover advantage on mobile, where companies such as Walt Disney Co and Electronic Arts Inc have released successful games.

To try to replicate its popularity on Facebook, Zynga is trying to create a network of mobile games under one brand where users can play the same friends across all titles.

In the new game released on Thursday, players race against the clock to unscramble words. "Scramble with Friends" is made for players who already play "Words with Friends" and "Hanging with Friends," two other Zynga word games.

"The most difficult thing on mobile is creating a network effect because mobile doesn't have the inherent built-in social network that a platform like Facebook does," said Paul Bettner, vice president and general manager of Zynga With Friends, the Texas-based studio formerly known as Newtoy, which Zynga acquired in 2010.

"A network of existing players -- that's what we're trying to build with the brand. If players are enjoying 'Words with Friends,' they already have a network of friends they've built up," he said.

Given Zynga's dependence on Facebook -- 95 percent of revenue comes from the social network -- investors are closely watching its mobile strategy. Zynga said on its IPO roadshow in December that it had 13 million daily players on mobile, up from 11.1 million in October.

According to Sterne Agee analyst Arvind Bhatia, Zynga finished December with roughly 47 million daily average users on Facebook, 5 percent less than a year earlier. Bhatia, citing AppData figures, said it was the first time Zynga finished the month of December with fewer daily players than it began the month with.

Zynga CEO Mark Pincus told Reuters in an interview on December 16 that the company's mobile user base is growing quickly and catching up to its Facebook users.

"It's important to note that's 13 million daily active users (on mobile) compared to some north of 40 million daily active users on Facebook -- it's already more than 20 percent of the traffic," Pincus said.

Zynga has not revealed how many paying players it has on mobile platforms. The company has a free version of "Scramble with Friends," where it makes money on advertising, as well as a premium version for $2.99 that does not have ads. Players can also buy virtual tokens in the game.

The game will come first for Apple Inc's iPhone and iPod touch; an iPad and Android version will be out at a later date.

(Reporting By Liana B. Baker; editing by John Wallace)

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