History of Zynga

Early Days

Zynga is a social video game services developer founded in 2007 by Mark Pincus. The timing of the company’s inception coincided greatly with the rapidly growing trend of videos games being played in web browsers as well as Facebook’s release of Facebook Platform in 2007. Facebook Platform gave a set of a tools to third-party developers so they could build apps on Facebook, an implementation that would see Facebook emerge as one of the most popular websites for social video games. Zynga was one of the first adopters of the service releasing its first game, Zynga Poker, in July 2007. Zynga followed its first game’s initial success with releases such as Mafia Wars, a multiplayer game having players manage their own virtual crime syndicates, and Words with Friends, a multiplayer game similar to the classic board game Scrabble. However, it wasn’t until the release of FarmVille that Zynga cemented itself as the clear leader in the social gaming industry.


The company name and logo were inspired by Pincus’ American bulldog.

The FarmVille Phenomenon – Zynga’s Rise

In June 2009, Zynga released FarmVille, a farming simulation game revolving around players managing farmland, harvesting crops, and raising livestock. The game was met with immediate success and quickly became the most popular game on Facebook, a distinction it held for over two years. At its peak in 2010 the game had 83 million monthly active users and 34 million daily active users. While the game was a success in itself, it also laid much of the framework for many of Zynga’s future games. Releases such as CityVille and ChefVille had very similar gameplay masked by different settings. Despite the games being similar, these future releases continued to be very successful and profitable. At this point Zynga was undoubtably the most successful app developer on Facebook with a wide ranging collection of popular games. Their success was seemingly inevitable as their timing and early business decisions were undeniably ideal. Much of their success stemmed from them strategically tapping into the market of casual gamers – i.e. Aunt Susan, who never would have owned a Playstation, but found a lot of fun in  the simpleness of FarmVille. Zynga also took advantage of the early days of Facebook when ads and generating traffic was generally cheap allowing them to easily market to the hundreds of millions of Facebook users. However as we are all too aware, the tech industry is always evolving, and Zynga’s inability to adapt quickly led to its fall from social gaming dominance.

Zynga’s Decline

A wide variety of factors led to Zynga’s decline in both revenue and standing in the social gaming industry.

Much of Zynga’s decline was directly from the actions of Facebook. As stated earlier, Zynga benefited greatly from Facebook’s low ad costs. However, as we read in our Facebook case study, Facebook soon figured out how to show their users better ads allowing them to charge more. Facebook also took a page out of Apple’s App Store playbook and began taking a 30% cut from developers on its platform. All of these actions by Facebook deeply cut into Zynga’s net income. While prices of ads were increasing, Zynga still had the opportunity to market their games through players posting updates about their games on their Facebook timelines. We all remember how annoying it could be when Aunt Susan would post daily updates about her games, and Facebook recognized that this annoyance could be detrimental to its platform. This situation led to Facebook reworking its algorithms so these posts would be shown far less frequently, significantly hurting Zynga’s marketing scheme.

Most importantly, the social gaming market transition from desktops to mobile devices significantly effected Zynga. As the popularity and power of smart phones rose, the mobile market soon became the go to spot for casual social gaming. Apps like King’s Candy Crush and Supercell’s Clash of Clans soon became the leaders in the industry with Zynga unable to adjust to the mobile market.


While Zynga initially had incredible growth and success, the company had an equally quick decline beginning in 2012.

Lets Talk Money

Business Model

Zynga chose to adopt a free-to-play model in which anyone can play their games for free, although spending money made the experience a whole lot more enjoyable. Zynga’s primary source of revenue is from direct credit card payments made for digital items as well as partnerships with other businesses. Most of Zynga’s games revolve around the user’s “energy,” which is depleted as the user completes tasks in the game. When the player uses all of his or hers energy, they essentially cannot play the game anymore until their energy replenishes, a task that typically takes a few hours. Players have a few options in which they can replenish their energy without waiting. The first, and most profitable for Zynga, is players simply buying more with real currency. Besides energy, the players can also purchase in-game currency which can be used to buy virtual goods. Because all of these goods are digital, and thus have no marginal cost, Zynga makes great profits off of these sales. Players also have the option to obtain energy and in-game currency by completing offers from Zynga’s partnered businesses. These offers typically included filling out a survey, watching an ad, downloading an app, or signing up for a service. An additional way players could earn energy is through posting about the game on their Facebook News Feed or inviting people to play the game, often serving as free marketing for Zynga.


Zynga’s in-game currency and energy sales were so popular that the company began selling prepaid cards in over 12,800 stores in the US.

IPO and Stock History

In December 2011 Zynga listed ten million shares at $10 each in its initial public offering making it the largest tech IPO since Google. Zynga’s stock climbed to a price of $13.39 per share in February 2012 after Facebook’s IPO filing, largely because Facebook had stated that 12% of their revenue comes from Zynga. However, because of Zynga’s decline in revenue as well as Facebook’s poor IPO, the stock fell dramatically to $2.27  by October 2012, and now hovers around $3.50 to $4 per share.

Concluding Remarks

Just a few years ago Zynga was one of the biggest and most profitable companies in video games, but inability to adapt caused the company to lose much of its success as quickly as it came. However, recent changes in the leadership team as well as a full transition to the mobile market show much promise for the company in the future – the main focus of my presentation on Zynga next week!

Questions I’d ask Zynga:

  • Have their been any plans to develop larger scale games, potentially ones not involving the free-to-play model?
  • Do you believe that the simplicity of your games – the attribute that initially drew users to them – is now pushing them away as the style has been oversaturated?
  • Is Zynga pursuing any endeavors outside of developing games, similar to the partnership with Hasbro to create board games inspired by Zynga games?

10 thoughts on “Zynga

  1. Reading your introductory paragraph was like a walk down memory lane. I can still remember all of the Facebook notifications from Mafia Wars and Farmville! (Never played, just annoyed). Despite Zyga’s lack of success in the mobile sphere, it is interesting they were able to produce a number of hit games on Facebook’s platform. It just goes to show that video game design is much more of a science than an art.

    Liked by 4 people

    • Video game design is so hard to do, and with the shorter lifespan of games as apps, the turnover for companies like Zynga has to be rapid. I’m really intrigued in what their growth strategy when we go visit is.


  2. If I had a penny every time I got a FarmVille notification…
    It’s interesting that Zynga’s business model relied heavily on microtransactions, which at the time were met with no resistance. Now companies such as EA have received a ton of backlash by using this system in their most recent games. I think the situations aren’t similar enough to warrant a real comparison, but it’d be fascinating to see how the public would react to Zynga’s use of in-game purchases if they were still as big as they were 6 years ago.

    Liked by 2 people

  3. Its amazing how quick your fate can turn in Silicon Valley. I never got into FarmVille, but to think that they made more money on Facebook than Facebook did…WOW. I think that the mobile gaming space is very interesting, because you are looking for games that you can play in a couple minutes when you have free time, versus the console or desktop where you have more time. The fact that EA can charge $70 for a new game and then still make you pay for DLC amazes me, but maybe thats the difference in mobile vs. other platforms. With competition much greater now then years ago, it will be interesting to see how Zynga can bounce back!

    Liked by 1 person

  4. Great summary of Zynga. As we discussed in class, timing is everything and Zynga’s timing was on point! They quickly become a leader in the social gaming space. I, too, remember the days of Farmville (and all the notifications that came with it). It was interesting to read about how the market changed (desktop to mobile) and how FB’s new model affected Zynga. It’s tough for companies to anticipate changing trends and adapt quickly. Excited to follow Zynga and see how they can make a comeback in the mobile gaming space!

    Liked by 1 person

  5. Zynga was my sleeper favorite visit last year. I entered thinking “why the heck are we still visiting Zynga?” I finished with a vision of where the company was heading on a very plausible turnaround strategy led by Bernard Kim. I hope we get to visit with him again. It will be interesting to see where things are.

    Liked by 2 people

  6. Great post! I didn’t join Facebook until 2016 so I completely missed the Farmville era. However, I didn’t know that Zynga also produced Words with Friends! It is interesting to see how Zynga’s model depended so much on how Facebook was originally designed and that a failure to adapt to change led to such a sharp decline of a successful company. With all the changes Facebook is rolling out today, it would be wise for companies to learn from Zynga and try to work with the changing environment. Looking forward to your presentation about how Zynga can pivot and make a comeback!

    Liked by 2 people

  7. I was a Zynga fanatic back in the day and played every game going — Cafe World, Farmville, Mafia Wars, you name it. Though I don’t miss those notifications at all, I think the company’s pivot to mobile is a smart strategy. Zynga was one of my favorite visits, too!


  8. I remember playing Zynga Poker a few years ago and absolutely loving it! Since then, Zynga seems to have dropped off the map a bit, but it’s interesting to see how their business model and management has adapted to the obstacles and begun rebounding. Zynga has long profited off the “freemium” model, but with the popularization of games like Fortnite, it will be interesting to see how their business model and approach to gaming evolves in the near future and long-term.


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