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Zynga plays alone for now
December 2, 2009 / 8:17 PM / 8 years ago

Zynga plays alone for now

SAN FRANCISCO (Reuters) - Fast-growing Zynga, whose games are a hit on Facebook and other social networks, plans to play alone for now, eschewing talks with suitors and holding back on any plans for going public, its chief executive said on Wednesday.

Privately held Zynga makes games for social networks and then profits by selling add-on tools. The fish-raising game FishVille, for instance, lets players purchase virtual food and goods with game cash -- which can be bought with real world dollars.

The tiny “micropayments” for fish food add up quickly for Zynga, one of the stars in the nascent virtual goods industry, which has attracted Silicon Valley venture capitalists.

Industry watchers speculate that Zynga could raise $1 billion to $1.2 billion in an initial public offering in the near future if it chose to go that route.

But founder and CEO Mark Pincus said at the Reuters Global Media Summit that Zynga is not thinking about going public right now and dismissed talk of a buyout.

“We have not had conversations with companies about buying us.”

“The path that makes sense to me today is to go independently, because we don’t need capital and we’re having fun,” he added

Social games attract hundreds of millions of users around the world. Zynga’s games run on social networks including Facebook and MySpace, directly from the Web and on mobile devices such as Apple Inc’s (AAPL.O) iPhone.

Pincus stressed it’s early in the game for both his company and the industry as a whole. “We don’t think that we would execute better today as a public company.”

He estimated the global virtual goods market currently at around $4 billion and said he expects it to quadruple in the next three to five years.

“Eventually I think more than half of the population of people who are socially connected will participate in social games.”


Zynga games get more than a 100 million unique users every month, and the company generates 90 percent of its revenue by selling those people “virtual goods,” at anywhere from $1 to $20, with most priced from $5 to $10, it says.

Two sources said last month the company’s revenue was coming in at an annual rate above $200 million, and the company -- with more than 600 employees -- is continuing to grow rapidly.

Another big social gaming company, Playfish, was acquired by Electronic Arts ERTS.O for $275 million in cash and other considerations last month.

“We would have loved to buy Playfish, we really admire them... maybe if we were public we would have been able to merge some way with them,” Pincus said.

He said that Zynga would likely make small acquisitions each quarter, in order to bring talent in. “We have 300 open positions that we haven’t been able to fill or as they fill new ones open.”

Zynga’s venture backers include Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures and Pilot Group.

Reporting by David Lawsky and Gabriel Madway; editing by John Wallace and Carol Bishopric

Our Standards:The Thomson Reuters Trust Principles.
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