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Zynga might finally have a long-term chief executive officer.

The social gaming company released its financial results for Q1 2016 on Wednesday, which showed that it was making progress in its attempt to shift focus away from its once lucrative Facebook business as it moves to mobile (largely thanks to its successful slots games and the popular Words With Friends). This is all comes shortly after the company received a new chief executive officer. Frank Gibeau, who previously worked at Electronic Art’s mobile division, took over the CEO job from Zynga founder Mark Pincus 60 days ago.

GamesBeat discussed Zynga’s successful quarter with Gibeau, its current and future mobile strategies, and what he’s done at the company during his first two months as CEO. Here’s an edited transcript of the interview.

Zynga's Spin It Rich! Slots.

Above: Zynga’s Spin It Rich! Slots.

Image Credit: Zynga

GamesBeat: How have your first months as Zynga’s CEO gone?


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Frank Gibeau: I’m on day 60 officially [the interview was Wednesday –Ed.]. It’s been fun. This is a great company. I’m enjoying it. When you walk into a company for the first time, you never know what to expect. I’ve been excited about how the teams have rallied to what we’re trying to do here. The momentum and pace is improving every day. I’m seeing better decisions, sharper decisions, faster moves, better products happening. We’re making progress in the turnaround we’re in.

We had a good Q1. We saw real strength in our live businesses. The social casino business, Poker, and Words with Friends all hit big highs in bookings and audience. We beat the top end of the range in bookings and on the bottom in EBITDA (earnings before interest, taxes, depreciation, and amortization). We did a good job doing more with the resources we have, managing our costs and deployments better.

Some of the things that jumped out at me — our mobile momentum continues to grow. We demonstrated some strong year-over-year growth in bookings and audience. We’re up to 76 percent of our total revenue on mobile, which is an all-time high. We’re also in a position where Apple is our largest platform. That’s exciting considering we’re a company that was founded on the web and such a leader on Facebook. The fact that Apple and Google are at the top of the list is a great indicator that we’re doing the right things there.

We saw bookings grow year over year in terms of the mobile piece. It’s up 54 percent. Our audience was up 7 percent in the first quarter. Managing our audience has been tough over the last few quarters, trying to stabilize it and get it growing again. It’s nice to see that bounce up. I’ve been surprised at how much operating leverage is available to us here. We can get a lot more from the resources, talent, and ideas that we have around the company than we currently do. We need to get ideas off the whiteboard and into code.

We need to be sharper and more disciplined about the games and investments we’re making. We need to raise expectations as far as putting our best and brightest with our biggest ideas. Somebody who’s spent the last two years of their career running a mobile business is going to serve me well because I know what good looks like in mobile. What I see at Zynga is a lot of talented teams, proven brands. We’re in the right genres, but we’re not in a great deployment. We can do a lot of things on an operating level that will help us make better games and provide shareholders and investors with a better return.

It starts at the operating level. It’s not so much the cost level. What games are we building? Are they the biggest ideas we can make? Do we have the right teams on them? What games are we embarked on that may be distractions or ultimately aren’t going to lead anywhere? We can be more disciplined about not starting those and focusing on products like Words With Friends, which saw its best quarter in six years.

We’re staffing up the live businesses like they’re new releases. New releases are great, but the mobile business is about growing live services and building recurring audience and revenue over the long term. As I look at social casino, Poker, Words with Friends, those are the things that jump out at me. Spin it Rich is a business we’re seeing great results on. We’re excited about it long term.

People still love Words With Friends.

Above: People still love Words With Friends.

Image Credit: Google Play

GamesBeat: How is Words With Friends able to do so well now, six years after release?

Gibeau: It’s a thoughtful thing. When Mark came back earlier in the year, he directed the focus of the live teams toward being more aggressive with what we call big beats. Big beats are title updates that introduce new features, new ways to play. They may clean up little things here and there as well, but in general, it’s about new ways to play.

For Words With Friends, we released weekly challenges. That profoundly changed the number of moves people were taking. It increased the number of turns per player, the number of games that were happening. It increased the per-player metrics and brought back some folks as well, reactivated them.

When you look at a game like Words With Friends, it has a terrific ad business. It has some cool innovation happening around weekly challenges. That’s how you do this. You don’t just let it coast. You continuously develop against it and you put good people behind the big beats. They’re like new product releases. Mark started that process and now I’m here to help amplify it. We’re going through each of our products and figuring out how we can innovate in each of our games on a live basis. That’s where we have momentum and a lot of success right now.

We’re committed to our new release calendar. We told the Street we were going to launch 10 games this year, and we’ve launched four of them already. We’re doing everything in our power to get the rest of these games out. We have seven in soft launch. We have some big ones in there: CSR Racing from NaturalMotion, which we’re targeting for Q3 release. Dawn of Titans is well into development. We’re looking for a holiday release there.

GamesBeat: What is your working relationship like with Mark Pincus? How do you two work together?

Gibeau: He’s executive chairman, and I’m in the CEO job. I was a board member while he was CEO. We got a chance to build a good relationship over the six or so months I was on the board. I was in the building multiple days a week helping operate the company. We developed a good working relationship. We have different styles and we approach problems from different directions, but they’re complementary approaches. So much so that Mark approached and asked me to step into this role. That’s a good indication that he and I had a positive and productive relationship.

Mark has incredible insight and a real genius for how to build social games. He founded Zynga on an idea nobody else had. For me, it’s exciting to harness and bring to bear a lot of his insights about how to make games more fun to play with friends and family. A lot of the IP we have here, whether it’s Words with Friends or Slots, those are products created under his watch as CEO. From my perspective, having Mark around to help out on those fronts is huge.

Mark Pincus, former CEO of Zynga.

Above: Mark Pincus, former CEO of Zynga.

Image Credit: VentureBeat

GamesBeat: You were working on an Ice Age match-3 game that you’d licensed from Fox. Did you have anything to do with bringing that about, given your past relationship with Fox when you were at EA?

Gibeau: I’ve had a fair bit of experience in licensing IP, like with Star Wars. But the Ice Age business predates me. That was somebody else at the company. But it’s a proven tactic for us. We’ll keep our eyes on it.

What’s interesting about the match-three category is the strong affinity to slots. When you talk to our slots players, the Spin It Rich fans, their next favorite game to play is usually in the match-3 category. We’re trying to build match-three experiences that build on that relationship they have with us. You’ll start to see some brands like Wizard of Oz and others manifest themselves in a match-three category. The idea is that it’s tied to the slots portfolio ecosystem we’re building.

GamesBeat: Is it possible we’d see licensing games from Zynga outside of the match-3 or slots categories?

Gibeau: It’s definitely something Zynga’s done in the past. It’s a strategy for us to think about going forward. The good news is that we own a lot of our intellectual property. We have very high-margin businesses from a financial standpoint. That’s good. When you own your ideas you can do anything you want with them. It’s possible to add a few big licensed properties in the mix over the long term as we grow our company.

The Simpson's: Tapped Out.

Above: The Simpson’s: Tapped Out was a hit when Gibeau worked at EA.

Image Credit: Google Play

GamesBeat: The history of Zynga started with a strong debut on Facebook. It was a big pioneer in social gaming. As the industry shifted to mobile, do you think that association with Facebook was a hindrance to the company for a while?

Gibeau: In general, you see companies that get really successful in one business model, one distribution channel, one platform. They go all-in on it. Then, when the new thing shows up, it comes out of nowhere on them and it’s hard for them to adjust. It’s the innovator’s dilemma. If I’m really successful here, I’ll have to completely retool to be successful there. Sometimes companies are slow to make that move. If you look at the history of the company it’s fair to say that’s what happened here.

What’s positive about where we’re at on May 5 is the fact that now 76 percent of our bookings are on mobile. Apple is now our largest platform partner. The transition to mobile is in the late innings. That’s positive. Now it’s about growing and getting more returns from the resources and assets we have on mobile.

GamesBeat: Sixty days ago, when you started as CEO, what was the No. 1 thing you wanted to accomplish?

Gibeau: When you first come into an organization, you never know it all. In those first few days and weeks, you want to meet people. I went out and did a lot of team Q&As, kind of like Reddit ask-me-anythings, on a very small team level. I went everywhere. I thought of that as an opportunity to re-recruit people into the mission of Zynga, to give them a sense of the social gaming vision and where we want to take it together in the future.

I got some real good zingers in terms of questions, but I enjoy that part of the job. I told them, “This is what’s important. This is valuable. Don’t waste your time on this other stuff, because it’s not going to move the needle.” I wanted to rally people toward the idea that Zynga can be great. While we’re not reaching our full potential, we definitely have it in front of us. I wanted to recruit people into this mission and this vision.

When you do a turnaround you have to start with that galvanizing and vision and engagement that rallies people internally against something that your customers, that gamers care about on the outside. We believe that’s connecting the people of the world through games. It’s more fun to play games with friends and family. That needs to come to life in our products and services. Going out and challenging people on that level and listening to them was a lot of fun.

I’m still getting on airplanes to see more of our teams. I haven’t made it to our India team yet. But I’ve hit most of San Francisco, London, Oxford, and Brighton. We’re on our way.

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