CORRECTED-For some Zynga games, mobile produces more revs per user than Web-CEO

Wed Jul 18, 2012 4:22pm EDT

(Corrects headline and paragraph one to show reference is to revenue per user)

By Gerry Shih

SAN FRANCISCO, July 18 (Reuters) - Some of Zynga's most sophisticated games, including "FarmVille," generate greater revenue per user on smartphones than on Facebook's Web-based platform, the company's chief executive, Mark Pincus, said Wednesday.

Some of Zynga's deeper-engagement games -- titles like "FarmVille" that falls into what the company calls its "invest-and-express" category -- successfully generate revenues from smartphone users because of their mobile format as well as gamers' demographics, Pincus said.

"On mobile they actually monetize higher than on the Web," Pincus said.

The comments came at a technology industry conference hosted by Fortune Magazine, where Pincus fielded questions about Zynga's sagging stock price and its closely watched mobile strategy. Zynga shares traded at $4.61 on mid-day Wednesday; the shares are down by more than 50 percent since going public at $10 a share last December.

The company, which makes 92 percent of its income from games on Facebook, has made a major push in recent months to expand its mobile offerings and lessen its dependence on the world's largest social network.

Pincus's comments provide a point of optimism for the company -- and a consumer Internet industry that has broadly struggled to squeeze revenues out of mobile users. Many companies serve ads to make money, but the smartphone screen offers a limited canvas to display ads.

The smartphone format, however, benefits games like "FarmVille," because mobile users are more inclined to make in-game purchases, Pincus suggested.

"The friction around spending -- the behavioral friction is much, much lower on mobile," he said.

He also cited demographics as playing a role in the performance on mobile .

"Smartphones are more concentrated in North America and Western Europe," he said. "Facebook is more evenly dispersed."

But he acknowledged that some of Zynga's most popular mobile games, casual titles like "Draw Something" and "Words with Friends," do not "monetize as well as our high-engagement games."

Pincus spent more than $180 million earlier this year to acquire the game studio behind "Draw Something," which began to wane in popularity after the deal.

When Fortune Magazine writer Adam Lashinsky asked Pincus if he rejected the notion that the deal proved ill-advised in hindsight, Pincus demurred.

"It's too early to call it after one quarter," Pincus said. (Editing by Leslie Adler)

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