Zynga now generates more than 90 percent of its revenue from mobile games and just 10 percent from its legacy Facebook desktop games. And that helps the company meet its own targets for growth better, as mobile is growing far faster than the shrinking web business.
Zynga beat expectations for its second quarter ended June 30 thanks to strong performance from mobile versions of Words With Friends, Zynga Poker, and the racing game CSR2. Most of the increase in both revenues and bookings came from live services, or the use of special events, new features, and other tricks to keep fans coming back to their favorite ongoing games.
The company has transformed itself to 90 percent mobile revenues. Facebook desktop web games were once the biggest part of the company, but that’s now just 10 percent of revenues. That business fell 16 percent from a year ago, but CEO Frank Gibeau said in an interview with GamesBeat that the company continues to manage it because it has some very loyal and longtime customers.
Gibeau refers to Zynga’s three big games — Words With Friends, Zynga Poker, and CSR2 — as “forever franchises,” and they’re living up to the notion that they can keep growing revenues. CSR2 had its best quarter ever, two years after its launch, thanks to manufacturer events such as a BMW event, as well as tie-ins with the Fast & Furious franchise.
Zynga’s overall revenues were $217 million in the second quarter, up from $209.2 million a year earlier. Bookings were $233.9 million, up from $209.2 million a year earlier. Mobile revenue was up 7 percent from a year ago and mobile bookings were up 17 percent. Analysts expected bookings to be about $228 million.
Zynga had a slight slide from the first quarter of 2018. Gibeau noted that the core business was strong during the quarter and it beat expectations. On top of that, the quarter benefited in a partial way from the $250 million acquisition of Gram Games, the London and Istanbul-based mobile game company whose Merge Dragons casual title is showing a lot of potential, Gibeau said.
“Merge Dragons could be one of our forever franchises,” he said.
Words With Friends mobile revenue was up 30 percent and mobile bookings were up 49 percent. CSR2 was down 4 percent in mobile revenues and mobile bookings were up 21 percent.
“We did cool things with the economy by adding new ways to play,” Gibeau said.
Zynga Poker mobile revenue was up 19 percent from a year ago and mobile bookings were up 13 percent, supported by continued enhancements to in-game features such as Challenges and Jackpots.
Overall mobile daily active users were up 12 percent from a year ago, and monthly active users were up 10 percent. The user numbers declined slightly from the previous quarter in part because of changes on the Facebook platform and the sunsetting of some older Zynga games.
With the addition of the Gram Games and Peak Games acquisitions, Zynga’s staff has grown from around 1,500 to 1,600.
Zynga is in the soft launch, or testing stage, for its Willy Wonka Sweet Adventures match-3 game. Gibeau said he is encouraged by the results so far, and he said Zynga continues to invest in creating brand new games like the Wonka title., where you do things like rebuild a chocolate factor and craft items.
Gibeau noted that the “hyper casual game” category is growing in the overall game industry. New players like Voodoo are generating ad revenues from free games such as Baseball Boy. Zynga bought Gram Games, which has titles like 1010 and Six, in part to address the hyper casual market. He noted that mobile ad revenues were up 26 percent from a year ago.
“It’s really cranking for us as a significant part of our business,” he said.
On a down side, Gibeau said Dawn of Titans, a hardcore fantasy mobile game, is not tracking to expectations and hasn’t reached its full potential. He said it does cool things and “we are continuing to chip away at it” with improvements and events for players.
Zynga continues to experiment with chat games and he believes that the future of streamed games could be important for Zynga in reaching new platforms. He is excited about augmented reality, virtual reality, blockchain, streaming, 5G wireless broadband, and chat games.
“We are excited about the opportunities throughout gaming,” he said.