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To describe Zynga as a powerful influence on the Facebook developer platform would be an understatement. The company has achieved levels never thought possible. Farmville, the company’s leading application has reached levels that no other developer has ever come close to. In other words, the company is in a league of its own. With over 126 million monthly active users, the company accounts for the sum total of the next three largest developers: Playfish, RockYou, and Causes. So how did the company get to be so large?
The Art Of Chess
If Facebook application development was a chess game, Mark Pincus, the CEO behind Zynga, might as well be considered the Bobby Fischer of the space. He’s been playing the game before it even started. His first major success, Freeloader, was the first web-based consumer push information service which was acquired seven months later for $38 million. He then launched SupportSoft, a company which provides online tech support and was eventually rebranded as Support.com.
Following SupportSoft, Pincus launched Tribe Networks, and while it may have not been the greatest success, one major thing came out of the company: the acquisition of what may be considered a priceless patent.
Facebook’s Kryptonite
In 2003, Pincus and Reid Hoffman acquired the “six degrees patent” which the New York Times described as “the seminal social networking patent” at the time. This took place during the early years of social networking. Sixdegrees.com, possibly the original online social network, owned the patent and the company was eventually purchased by YouthStream for $125 million back in 1998.
As the New York Times wrote at the time, Mark Pincus and Reid Hoffman (founder of LinkedIn and member of the “PayPal Mafia”) were talking to Friendster to try to become co-owners. CNET wrote around the same time that the two were actively snubbing Jonathan Abrams, the founder of Friendster. Whether or not that happened is irrelevant because Friendster is little more than history at this point and Facebook is now the most dominant leader.
While Pincus and Hoffman claim that the “six degrees patent” was acquired for defensive measures, there’s no doubt that it carries with it significant influential powers. The two don’t just have capital in terms of assets though, they also have a large amount of relationship capital. Reid Hoffman is now an investor in Facebook (for a number of reasons). In-Q-Tel, the CIA’s venture firm which also holds a number of social networking patents, happens to be an investor in Facebook as well.
While the patents may not have been the primary foot in the door for both parties, they most definitely enter into some form of consideration. You don’t need to actually threaten people (with lawsuits) to yield influence over their decisions. In the case of Zynga, having the “six degrees patent” could prove to be extremely valuable when dealing with the Facebook execs.
Sucking Up Facebook’s Ad Inventory
Zynga has blown past all competitors and it’s not that surprising considering that they are spending a reported $50 million on Facebook ads annually (and that is most likely growing as they expand). As Zynga helps fund Facebook’s growth they reciprocate the favor. A company’s success on Facebook revolves around three factors: ability to maximize viral channels (to drive new users), the ability to create an effective internal engagement loop within an application, and access to an open communication channel with Facebook’s platform people.
Zynga has all three of these and they have an extremely tight relationship with Facebook through private parties (which are buzzed about heavily) and through committing to large ad buys. In other words they’re helping out each other. As many developers have noticed, Zynga has managed to own entire sets of ads on a single page sometimes. In other words, all “three” advertisements on a single Facebook Page will link to Zynga’s Mafia wars game.
Swallowing Developers
Zynga is an aggressive player in this space … possibly the most aggressive. There is two parts to their strategy. The first is to fund developers that have game ideas, promote them, and for those that are successful, they snatch them up, often at pennies on the dollar. The second is outright acquisition of successful application that they didn’t fund.
Unfortunately this model can be challenging so the result is that if they can’t afford to pay what a developer wants, they’ll go build their own version of an application. Take FarmVille as an example. The application has grown to 48.5 million monthly active users and continues to grow daily. Farm town has had stagnant growth, sitting comfortably at the 6th largest Facebook application.
But what on earth has brought the application to now over 18 million daily users? That’s something many developers are dying to know and while the reported “Zynga Playbook” may help with discovering their secret sauce, there’s much more behind the success. At this point the company is in a league of its own and its well deserved.
The Race To An IPO
Mark Pincus and Zynga are firing on all cylinders and many have reported that the company is looking to beat Facebook to a public offering. While there’s speculation that the company isn’t highly profitable given their large budget being spent on Facebook ads, they are working toward a $1 million a day revenue target.
Right now they’re more than halfway there according to numerous sources and as they move in that direction, they’re hoping to walk into the embrace of a more open IPO market in the coming months. Whoever wins the race (or long slog depending on how you look at it) to IPO, it’s clear that Zynga isn’t just competing with other application developers, they are attempting to take on the biggest social platforms to squeeze as much profit as possible out of a rapidly growing user base.
One interesting statistic: Facebook used to double every 6 months, Zynga is now doubling every 2 to 3 months (in terms of the sum total of users playing their various games).
Hey that is an interesting race between FAcebook and Zynga. let us see who wins that race. I mean I think that Facebook will always remain facebook. It is in peoples minds.
All the best.
Too bad they don’t count unique users. At the rate you are talking about soon zynga will have double the daily users that facebook does even though only about 7% of facebook users use apps. Something doesn’t make sense here.
How did FarmVille get to 18MM active users? It’s called a huge install base, a fuckton of ads, and focusing on newer viral channels, e.g., the feed.
There were 2-3 weeks where I saw nothing but Farmville ads on the right-hand side of Facebook. Of course, now all I see are Mafia Wars ads again.
Yeh, let’s see who wins.
I’m convinced - no more time on FarmVille - I think it sucks anyway.
Zynga is doing a great job! This company is making money fast & quiet without any PR. well done!
I hope Facebook wins … Hey whats up with the Player? Great new toy to play with. Getting bored with the mindless repetitive time management games. Come on Facebook!! Virtual goods are so yesterday ….
Would like to see rich text in note to blog in.
Does @Zynga have a #PacMan_Strategy?
1-Beat Facebook to an IPO on the back of a $150-200 million run rate
2-Ramp up the value of Zynga paper
3-Reverse merge Facebook into Zynga using Zygna patents as leverage
$MSFT and the rest get pawnd.
If I were Mark. I would go extra large and swing for the fences.
http://www.twitter.com/aainslie
And Yoville usage continues to drop. Could this be in response to organized opposition to the Sweets Factory
Why is Zynga being white-washed? It’s a corporate greed monster. Did the author of this article happen to read Zynga’s Sept 22 2009 response to the Better Business Bureau? The one that, in essence, said “We don’t give a damn about our paying customers or their complaints which we routine elevate to our non-existent tier 2 aka File 13. If we don’t like our customers who do complain, we will invoke some vague violation of our TOS and ban their sorry butts. We are the ~Wal-Mart~ of the social gaming industry building and marketing perpetually broken applications with a focus on introducing new broken features for those applications and WE DON’T CARE whether our customers - even our PAYING customers are satisfied or not!”
Keep touting them as geniuses only move them to the category of all those Wall Street moguls who screwed the economy and got away with those hefty corporate bonuses because that’s ALL they are.
So the whole Zynga Farmville is causing trouble in Yoville by them copying the time limit aspect.
I for one think Zynga has alot of problems with their games here on Facebook and Myspace. They keep coming up with childish games that don’t work properly and makes everything freeze up. Now they have added Sweet Factory which is causing more problems. How about asking us if we want the new Sweet Shop, GUESS WHAT WE HATE IT… Nice for you guys who are making money but not good at all for us who try to play your games. YOVILLE is getting to be a pain, you charge so much for things its unbelievable…..give us a break who cares how much money your making off us….
oh ya and tks for the 750coins lol what a laugh, everyone is so mad because of the Sweet Shop and you only come up with 750 coins and that’s suppose to make us all happy NOT
What a lame article….
Lets see how long my writing will be here before getting deleted.
Zynga have a game named Rollercoaster Kingdom, a lot of people use it, but do they care to help getting errors fixed ?
So far a lot of people have been suggesting thing and what needs to be fixed, bau as one above said, they care shit about their customers…
So OFF with Zynga and in with like Playfish as they understand what service is…
Zynga put your $$ in your behind and get all the errors fixed or close the business…
From a business point of view, the story sounds amazing, similar to many amazing business stories that come from the US. It’s indeed the American way to head clearly towards the IPO, even if it means ingoring some comments of some user groups that aren’t really important to care for … as long if there is no negative publicity. It remains a story to keep on to, to proof that SN’s can have a decent business model and can be profitable. Zynga wouldn’t have become this big without Facebook and MySpace and to keep the position they’re more than happy to pay large sums of advertising.
From a gamers point of view, Mafia Wars taught me many lessons about viral methods in Facebook. I think I’m to blame that at least 50 people got hooked to the game, just like I did. It shows well an Facebook application can indeed keep & pull users on a daily base. But after playing for a while I’m also happy that I’m not addicted anymore, as it remains a game. When you compare it with Warcraft, it doesn’t come close to the excitement, but somehow the social games of Zynga are a wonder in their domain.
I personally think that Zynga can teach many businesses who have not yet launched their business apps into Facebook a dozen valuable lessons. Just think that Wal-Mart would offer us time or friend-group driven deals in our Facebook with our own personal coupons. The web will change completely, from just plain e-commerce to social commerce, from bulk offerings to personalized offerings. That’s why I think Facebook will be bigger than Google in 5 years
Too bizar? I dare you to read my blog http://hhvo.wordpress.com/2009/05/19/the-social-web-is-like-the-offline-world-just-potentially-1000-more-effective/
And as for Zynga, like any other company that doesn’t care for their consumers, clients will leave. Until that time they’ll have the luxury not to care so much (With Mafia Wars I noticed substantial improvements). So if you want them to act faster about your complaints, then stop playing their games
Alot of people are having problems with zyngas apps…
And if u dare to complain they threaten to disable your account….
they disable your account and effectively steal any money you have paid into the game…
its not happened to me personally yet…
but there is quite a few facebook users who have asked for a refund on the money they have spent…. and had their accounts disabled and zynga keeps the money they have spent on app..
Surely this is theft
Zynga Influence
ShamVilles, MafiaFarts, Yo Yos are just to lame… Sometimes I wonder why these became popular…and the answers lie in human psychology: “Ease”, “Belonging”, “Fame” and “Pride”… all this has been well capitalized by Zynga games and made people addicted… “Stickiness”???
Repeat paid usage numbers have never been divulged, why?
This article clearly looks like an IPO prep in market for Zynga and nothing more…
Has no one noticed that virtually ALL the Zynga games have been out for over 48 hours? Only the most stable games, such as Mafia Wars and Vampire Wars, continue to play properly. Cafe World, Farm World, Yoville, and even such old games as Pirates, Special Forces, and Space Wars, have been inaccessible.