Zynga pioneered social gaming on Facebook, and it has been trying for a couple of years to replicate that magic on mobile. That path has been much more difficult than anyone thought. Yesterday, it announced it would accelerate that effort by paying $527 million to acquire Natural Motion, maker of CSR Racing and Clumsy Ninja.
Zynga also said that it was beginning to turn around financially, but it also made another round of layoffs, cutting 314 employees, or 15 percent of its total. That shows the company isn’t out of the woods yet.
Clive Downie, the chief operating officer at Zynga, has been on the job for three months, reporting to new CEO Don Mattrick. Together, they’ve created a new gameplan for getting Zynga’s mojo back, and they revealed it for the first time yesterday. We got a chance to ask Downie detailed questions about that comeback plan in an interview after the announcement. Here’s an edited transcript.
GamesBeat: How are you enjoying your first few months on the job?
Clive Downie: I’m loving it, although we had to make some hard decisions today in one area.
GamesBeat: Do the layoffs signal that Zynga may shut down other games? Or are you thinking of that as more like an across-the-board cutback, where a small percentage of each team might be cut?
Downie: The goal of this was to execute better and create meaningful leverage and efficiencies. I believe it’s the right envelope to run more than 30 live game services and create new against our growth aspirations and against our content strategy that I outlined in the call. The decisions we made today give us the right space to build on through 2014. We don’t want to be in a constant state of transition.
GamesBeat: You have shut down some older games. How do you decide that? A given game may not be high among the priorities at the moment. But I’m curious why you can’t just keep running it. Maybe it still has a million players. It seems like you could make money just running an old game, but you guys appear to have decided that’s not a good idea?
Downie: Right now, we run more than 30 live games that are delighting many millions of consumers every day. Some of them are well over a year old, or multiple years. We aren’t in the business of closing our products. We made a very specific decision recently with regard to YoVille. We always take a customer-centric view of our games. We value the long-term sustainability of our game communities, and we always strive to keep them active as long as possible within our game-lifecycle framework.
We do have a game-lifecycle framework. It’s not a snap decision. When this can’t happen any longer, we do look for other options. In the case of YoVille, there was a dialogue with the game’s creators about a partnership that would see the game continue to be grown and sustained by them, so that’s exciting. We’re in those discussions and we hope we can conclude them sometime soon and move on.
Our framework is about making sure that for as long as possible, our teams of people internally making games are sustaining those live game services and making them better, until such a point as we think, “For this good of our consumers, we should be having those game creators work on something else. They should work on making new things.” It’s always that balance between sustaining something and getting to something new.
GamesBeat: The Euphoria game engine is one of these big jewels at NaturalMotion. Would you go so far as to say that the decision to buy them was dependent on Euphoria? Will Zynga teams use Euphoria, or might that be something NaturalMotion itself would be best assigned to do.
Downie: I’m sure you’ve played CSR and Clumsy Ninja. Clumsy Ninja is a wonderful product with its best months and years ahead of it. Our decision to bring NaturalMotion into the family is because they make great games. They make great games because they have two things going for them that they’ve grown over a decade. They have excellent creative instincts and talent, and they have an excellent technology platform and tool set in Euphoria to realize that creativity.
It wasn’t just for Euphoria that we brought them into the family. Euphoria is a driving force that empowers that creativity. The end result is why we brought them into the family. They make great games, which makes it exciting to be able to work with them.
To your second question, will we look for ways to utilize Euphoria within the core of Zynga? Absolutely.
GamesBeat: The distinction between hardcore games and casual games, is it still one that you make, or do you consider the combination of these two companies to simply create one focus on making great games?
Downie: The combination is focused on making number one products in the categories that we’ve identified and will continue to identify going forward. I don’t necessarily want to put a classification on the products we plan to make as far as casual or hardcore. I’ll ask you specifically. Do you think CSR is a hardcore game? It doesn’t feel like a hardcore game to me.
GamesBeat: It almost seems to fit that midcore definition pretty well.
Downie: Yeah. The great thing is, you can play it in two minutes and legitimately feel you got something worth that time investment. It’s superaccessible. Anyone can pick it up and play it and enjoy. And then with Clumsy Ninja — I’m sure you’ve played that — it’s just a wonderful simulation of a person in your pocket that you can tune into and have fun with and smile with.
Downie: [Chuckles] The answer is no, because I don’t particularly believe those products are hardcore. They’re very accessible to many consumers around the world who want to participate in the categories and the themes that they use in the product.
GamesBeat: The priority market going forward seems to be mobile. These guys have demonstrated definite success in mobile. Is there a conclusion to make about this, that mobile investment is your priority?
Downie: We have an emphasis on growing our mobile consumer base by making No. 1 products in those categories where mobile consumers are and where we believe we can make a difference and break through social to those categories. But we make games where the consumers are in those categories, based on our expertise.
We have a strong Facebook and web business. Our poker product is strong there. Words with Friends is strong there. FarmVille is strong there. We’ll continue to innovate and grow and sustain those businesses. We have a new product launch coming on Facebook imminently with CastleVille Legends, which was mobile first. We make games where our consumers are, and we’ll continue to do that.
GamesBeat: As far as the state and number of players, do you see a light at the end of the tunnel, where you can turn that loss into stability or even a gain?
Downie: My sense is that in Q4, we saw stability in a number of our core properties. Words with Friends had its biggest quarter on record. Our poker business on mobile grew for the first time in 18 months, quarter over quarter. That coincides with consumer participation growth in those areas. As we work through 2014, we’re predicting sequential growth quarter over quarter, which will be aligned with consumer growth and participation. As we launch new products — we called out a number of them on the call, and there will be more of them going forward through the year – I’m confident and believe that the number of consumers participating in our games will continue to grow too.
GamesBeat: Did Clumsy Ninja have a whole pipeline of things coming after it? I know it was very good on downloads. Had it also proven to be a game with a lot of staying power and established monetization to it?
Downie: I’m really impressed with the work that the NaturalMotion guys put into Clumsy Ninja and the performance we’re seeing there. They have aspirations, which I’m confident will be realized, in terms of increased engagement and increased monetization. They have a strong road map for that product. We look forward to working with them and adding our strength into that, as far as breakthrough social features and live game services at scale.
Going forward, I think the prospect of what happens after Clumsy Ninja is a delightful secret. I look forward to talking with you more about that in the future.
GamesBeat: I could see a lot of other characters besides a ninja. I assume that’s an obvious part of the future.
Downie: [Laughs] As I say, it’s a delightful secret. I wish I could talk more about it.
GamesBeat: How is it working at Zynga alongside people like Mark Pincus and Don Mattrick right now? Are you guys taking on particular distinct roles right now?
Downie: Working with Don on a daily basis is great. He’s an elite executive in the gaming business, in the entertainment business. I’m learning from him, candidly, which is a great thing at this point in my career. We share a lot of the day-to-day operation decisions around the company. We talk a lot about future strategies and make decisions there. We both share the belief that Zynga will grow in our ability to reach more and more consumers in gaming daily, and have a delightful impact on their lives through the entertainment we create. That’s what we would like to do.
Mark is around. He leaves the running of the company to Don. I like participating with Mark. He’s a creative visionary, driven by success, highly energized to be supportive around the strategies and the operational decisions that Don and I make on a daily basis. It feels good around here right now.
GamesBeat: It sounds like a lot of the gameplan has come together now.
Downie: Don’s been here seven months. I’ve been here coming up on three. We have excellent teams, a really skilled and capable base of employees who are eager to win. It’s about tapping into that and reorganizing, resetting where necessary, taking the hard decisions like the ones we’ve made today, and then driving the accelerative opportunities like the acquisition of NaturalMotion. I don’t think it’s ever done, when you’re making content for people. But I feel good about where we are moving into 2014 and the opportunities ahead for Zynga.
GamesBeat: There was one thing on the call I had a question about with the data centers. I know that Zynga was moving into its own private data centers at one point, when it was still growing very dramatically, and away from using third parties like Amazon to run the data centers. Now I know that the audience has declined. Does that part of the strategy still make sense? Is that something you’re changing in order to save more money on the technology front? Do you still have your private cloud versus a public cloud, and is one more expensive than the other at a certain stage of growth?
Downie: It’s something that we continue to look at. With the different needs of the mobile architecture that we’re using, we’ve been able to drive efficiencies and consolidate our data centers, rather than having multiples, which has led to many of the efficiencies that we talked about today. We continue to look at it. This is something that I’m very close to, and I want to make sure, as we go forward, that we continue to make the right decisions for our game-makers and for our consumers.
GamesBeat: It sounds like an important part of the whole picture. If you can change the technology costs, then you can really change the equation as far as whether you can continue to run games or a certain number of games.
Downie: Our cost structure plays right back into our game life cycle decisions, yes. As a business, it has to. We’re always looking to — there are three things that we always look to do as a leadership team, every day. We look to grow and sustain our core business. We look to create new, wonderful things based on consumer knowledge and trying to be number one in additional categories. And we look to drive efficiencies. Those are the three rules that we build the business around, daily.
GamesBeat: It sounded like you have a more active launch schedule for games in 2014.
Downie: We have an active pipeline for products. We have teams engaged at various stages of the production cycle right now. 75 percent of our games are mobile first. Starting with, like I said, Riches of Olympus, which is in the next two weeks, and then followed up with FarmVille on mobile. We have a good number of shots on goal coming.