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Zynga is pulling the trigger faster on weak games. Today, the company announced it would close down its CityVille 2, The Friend Game, and Party Place, even as it praised the success of FarmVille 2 and moved to launch its real-money gambling games.
Chief operations officer David Ko said in an analyst conference call that Zynga is closing down games that don’t meet expectations, such as CityVille 2, which failed to match the audience of its record-breaking CityVille game.
The move shows that Zynga is willing to take swift action that may upset some customers, if it means that it can put more effort behind games that are getting traction. That’s important as the company tries to hit its goal of becoming consistently profitable in 2013.
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A bellwether for social and mobile gaming, Zynga fell in hard times last year as growth slowed for its Facebook games. Now the company is showing no mercy. It has closed its Boston and Japan studios and is trying to reduce operating expenses further. Ko described the company as setting up “guard rails” where it requires managers to shut down unprofitable games earlier than in the past.
During the fourth quarter, CityVille 2 failed to get a huge audience. But FarmVille 2 exceeded expectations by 100 percent and was the company’s best launch in two years. It’s no surprise that Brian Reynolds, chief game designer and the lead on CityVille 2, resigned from the company last week.
Chief exec Mark Pincus said during the call that Zynga took a bunch of actions to realign around its core goals. It shut studios and laid off staff. It realigned its teams for mobile first, so that it now has more teams on mobile games than it does for the web or Facebook. It promoted four leaders — Ko, Steve Chiang, Barry Cottle, and Mark Vranesh — into key management roles. And it realigned its studios around social casino games, casual, midcore, and “invest and express,” or its simulation games like FarmVille 2.
Pincus said that Zynga “leveled up,” or promoted, 550 people in the quarter. Zynga closed the quarter with 3,050 employees.
“We’ve always been a learning company, learning from our successes and our failures,” Pincus said.
Pincus said that new mobile games are on the way. Zynga has 298 million monthly active users, including 72 million on mobile.
Zynga is amid a “platform transition” toward mobile, said Vranesh, the chief financial officer of Zynga.
Pincus said the company’s three goals this year are to expand the company’s franchises and launch new ones, improve the reach of the Zynga network, and improve profits.
He said that FarmVille revenues (not counting Facebook’s 30 percent partner fees) have exceeded $1 billion life to date, across both FarmVille and FarmVille 2. Zynga also said that the FarmVille franchise has generated $100 million in gross bookings for six quarters now.
Zynga Poker grew its audience to 37 million monthly active users in the fourth quarter, up 8 percent for the year. In 2013, Zynga will introduce its Elite Slots game, which is currently in testing.
Pincus also said that Zynga is looking forward to entering real-money gambling in the United Kingdom as part of its previously announced partnership with Bwin.party.
FarmVille 2 and CityVille 2 were launched two months apart. An analyst asked if FarmVille 2’s success cannibalized the audience for CityVille 2. Ko said the company is learning from every launch and is focused on franchises. It will also launch fewer titles and space its games further apart.
“It’s hard to say,” Ko said. “We had a longer lead cycle where we tested. We didn’t have that for CityVille 2.”
Words With Friends continued to generate a huge audience on mobile, with 7.5 billion minutes of use in December alone.
Ko said that midcore gaming is getting Zynga’s development teams excited, and the pipeline of new games is heavily weighted toward midcore games (which are hardcore in nature but can be played for five minutes at a stretch) in 2013.
To reduce its costs, Zynga is adding to its low-cost development centers in India and China.
“2013 is a pivotal year for us at Zynga,” Pincus said. “We are realigning for $9 billion in socail gaming. Our goal is to make it easier and better to play across mobile and social.”
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