Zynga bets the Farm(Ville) on mobile

After spending years building its wealth through the desktop computer, Zynga is ready to bet the farm on mobile.


On Thursday, the video game maker launches its next title starring its biggest franchise, FarmVille, at what might be the most critical point in the company's seven-year history.


FarmVille 2: Country Escape, available Thursday for iPhone, iPad and Android devices, represents the vision of new CEO Don Mattrick, who took over nearly nine months ago to revamp Zynga's games business.


This next installment of FarmVille, which has attracted more than 400 million players since it launched five years ago, also marks a new approach for Zynga: building games focused first on the surging mobile audience.


'I feel we've made good progress on what's a long journey,' Mattrick says of the company's attempted turnaround. 'This market is a really exciting market to participate in. The growth of mobile devices, the success that we're seeing from other companies, is inspiring to myself and to our team. We recognize that the opportunity is there to compete and win.'



A scene from FarmVille 2: Country Escape for Apple iOS and Google Android devices.(Photo: Zynga)


Times have changed since 2009, when Zynga began its ascent with FarmVille. Two years after Mark Pincus founded Zynga in 2007, the company launched FarmVille as a 'social game' that let players manage their own farms, from harvesting crops to raising animals.


FarmVille leveraged another new player in the video game space: Facebook. The game took advantage of Facebook's growing audience to spread the word, through friend requests to start their own farms or offerings of fresh crops.


'Because they were attached to Facebook, they had almost that built-in growth right there on their doorstep,' said Gartner analyst Brian Blau. 'They just had to take advantage of it.'


FarmVille became Zynga's biggest hit. Nine weeks after making its debut in June 2009, the game topped 11 million daily active users, averaging more than 1 million new users a week. To date, players have spent more than $1 billion on FarmVille. The franchise spawned other Zynga titles carrying the Ville moniker, from CityVille to ChefVille, although none managed to top the popularity of FarmVille.


'There was a time where ( FarmVille) was sort of the 'it' game on Facebook,' says Cowen and Company analyst Doug Creutz. 'And Facebook was sort of the 'it' place to be for the casual gamer.'


The rise of games such as FarmVille and the Scrabble-like game Words With Friends transformed Zynga into a gaming behemoth, leading to an initial public offering in 2011.


Then a new gaming platform started to emerge: the mobile device. Smartphones and tablets replaced Facebook as the hot spots for casual games, and some players ditched their farms for games such as Rovio's Angry Birds and Candy Crush Saga, from casual games darling King, which just followed Zynga's footsteps by launching its own initial public offering last month.


According to research firm Gartner, the mobile games business raked in $13 billion in revenue worldwide last year. By 2015, it could top $22 billion.


'Out of all the video game segments, it's mobile that's growing the fastest,' says Blau.


Zynga was one of countless companies caught unprepared for the mobile boom. 'They've really struggled on mobile,' says Creutz. 'Their Facebook business has been declining for a while.'


Overall, Zynga's player base shrunk from 311 million monthly active users during the third quarter of 2012 to 112 million following the fourth quarter of last year. Annual revenue dipped from $1.28 billion in 2012 to $873 million last year. Meanwhile, Zynga shares sunk after its IPO launch. Following a peak of $14.69 in early March 2012, shares have failed to close above $10 in two years.


The declines forced Zynga to cut more than 500 jobs last June, its biggest layoff ever. The following month, Pincus named former Microsoft Xbox chief Mattrick as CEO.


'He's been very supportive,' Mattrick says of his relationship with Pincus. 'We were able to define a relationship where he would empower me and encourage me to be CEO, where he understood that there can only be two hands on the steering wheel at any point and time. Our relationship has been intellectually rewarding.'


Mattrick's arrival was the first of several executive changes at Zynga. Last fall, Mattrick appointed former Electronic Arts colleague Clive Downie as chief operating officer. Last week, the company named Best Buy veteran David Lee its chief financial officer.


'The company needed strong leadership,' says Downie. 'It needed a set of principles and a strategic framework and road map to work against.'


One of Mattrick's early tasks was turning Zynga's development attention toward mobile. He says 75% of the company's new titles are being developed to work best on smartphones and tablets, with a goal of more than half their revenue coming from mobile this year.


Mattrick and Downie repeatedly stress a deeper focus on customers, leaning heavily on consumer feedback in creating FarmVille 2: Country Escape. 'We're finally delivering something that aligns with the new devices and new consumer patterns people are using all over the world,' said Mattrick.


The most notable difference is in the game's social makeup. FarmVille was known for peppering Facebook feeds with endless notifications and requests. With the new game, Zynga is giving players more options on how to share with friends.


'We heard from consumers that social control is very important,' says Downie.


Jamie Davies, general manager of FarmVille 2: Country Escape, says players will still harvest crops and manage resources, but the game will also better suit the current habits of mobile players.


'Lifestyles have changed,' says Davies. 'People are on the go. We take our devices with us everywhere we go. We want more real-time satisfaction. I think of it as growing the franchise by bringing a more modern take and keeping up with the lifestyle of our players.'


Country Escape is only the beginning of Zynga's plan at a resurgence. 'Mobile-first' versions of Words With Friends and Zynga Poker are in the works. Mattrick says the company is also working on 'new things,' but would not elaborate on what experiences to expect.


One of those 'new things' could be linked to NaturalMotion, the mobile game maker purchased by Zynga in January for $527 million. The developer created mobile titles CSR Racing and Clumsy Ninja. 'They're going to develop racing games,' says Wedbush Securities analyst Michael Pachter.


Whether Mattrick's plan pulls Zynga out of its doldrums remains to be seen. Next week, Zynga reports quarterly earnings, a potential gauge of the company's current health. But Pachter believes Mattrick can help navigate the struggling games company back to its former glory.


'He's got a textbook approach to how to grow the business, which is go after the biggest opportunities,' says Pachter. 'I expect he will thrive. I expect he will get it right.'


Follow Brett Molina on Twitter: @bam923.

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