Speaker 1: Get in touch with technologies with tech Stuff from how
Speaker 1: stuff dot com. Hello again, everyone, and welcome to tech stuff.
Speaker 1: My name is Chris Poette and I am an editor
Speaker 1: at how stuff works dot Com. Sitting across from me,
Speaker 1: as is typical, is senior writer Jonathan Strickland. He there.
Speaker 1: Uh sorry, I was catching up on my chef bill.
Speaker 1: I needed to make some falcaccio. I was actually asking
Speaker 1: people to come over and water my plants virtually, So
Speaker 1: you may have already guessed today's topic is a quick
Speaker 1: look because it hasn't been that old, a quick look
Speaker 1: at the history of Zinga and Zinga is a company
Speaker 1: that has made a big name for itself, not always
Speaker 1: in a positive way online. And if you don't know
Speaker 1: what Zinga is, it's a company that's based out of
Speaker 1: San Francisco, California, as many tech companies are, and it
Speaker 1: is a video game company. But it's a game company
Speaker 1: that typically produces games that are either meant to go
Speaker 1: on mobile devices, so smartphones and tablets, or they're meant
Speaker 1: to exist on another platform like Facebook or Google Plus.
Speaker 1: Although you can also go to the Zinga dot com
Speaker 1: homepage and play games within widgets. Yeah, and uh, if you,
Speaker 1: if you weren't sitting from where we were. As soon
Speaker 1: as Jonathan said that this episode was going to be
Speaker 1: about Zinga, you probably didn't hear the groans of many
Speaker 1: of our listeners. We we heard you. It's okay, it
Speaker 1: was hold on. It was like a thousand voices created
Speaker 1: out in English and then were suddenly silenced. Yeah, zing
Speaker 1: is it is a company that has acquired a following
Speaker 1: and a big group of people who have pitchforks and
Speaker 1: torches both there there there seemed to be a few
Speaker 1: people in the middle of that, but not really. It's
Speaker 1: it's uh, we'll get into that in just a minute,
Speaker 1: but it does have quite a large group of people
Speaker 1: who really pick on Zinga because of its business practices.
Speaker 1: Um so, some people really love the games and some
Speaker 1: of the games I don't really consider games because it's
Speaker 1: really no ending to them. They're sort of software toys.
Speaker 1: But they do they do make some games and things
Speaker 1: and and there they had quite a huge, uh following,
Speaker 1: even just a short time ago. But let's but it's
Speaker 1: it's an interesting story because, as as Jonathan pointed out,
Speaker 1: it has been a very short time. I mean, they
Speaker 1: went from sort of nobody's in the industry, competing with
Speaker 1: some of the biggest players like Electronic Arts to you know,
Speaker 1: darlings of the computer industry and sort of towards back
Speaker 1: again and not quite back again, but they're they're approaching it.
Speaker 1: They're hurt as of the time. We're recordings in and
Speaker 1: we'll get more into all of that. So this is
Speaker 1: a company that was founded by a fellow named Mark
Speaker 1: Jonathan Pinkus who found h Zinga right around two thousand seven,
Speaker 1: and and Pinkas had been working well, he held several
Speaker 1: jobs which in an interesting article we read on venture Beat,
Speaker 1: which it was what was it a twelve page article
Speaker 1: about the history of Zinga. Oh, that's an amazing article.
Speaker 1: I would totally recommend people going to check this out
Speaker 1: of because we we can't cover the same amount of
Speaker 1: material and it it actually ends before we wanted to
Speaker 1: end too, so but a lot of our our research.
Speaker 1: It's a very well written article and we use a
Speaker 1: lot of our research on this on this It was
Speaker 1: written by Dean Takahashi for venture Beats and also has
Speaker 1: been converted converted into a sixty three page e book
Speaker 1: on Amazon's Kindle bookstore. So yeah, it's it's a very
Speaker 1: deep look at the history of zincing. Now, we should
Speaker 1: say this was written in two thousand eleven and a
Speaker 1: lot has happened since then. But uh. In that article
Speaker 1: they mentioned how Pinkas had said he had essentially been
Speaker 1: fired or asked to leave every job he held earlier
Speaker 1: on in his career, and then came to the conclusion
Speaker 1: that what he needed to become was an entrepreneur, so
Speaker 1: working for himself rather than working for someone else who
Speaker 1: would eventually tell him to go away. Well, that's that's
Speaker 1: what these are not my well that was my paraphrasing
Speaker 1: of what he said, but these were his words, and
Speaker 1: and he was probably being somewhat facetious, but essentially what
Speaker 1: he was saying is that he has this desire to
Speaker 1: create businesses, and so he struck out and started struck
Speaker 1: out his inn, left the corporate world, not struck out
Speaker 1: his inn with it, and then started to launch businesses
Speaker 1: and several of them saw some early success. He h
Speaker 1: he launched companies like Freeloader Incorporated. UM, he launched a
Speaker 1: very very early social network called Tribe Networks, which did
Speaker 1: not ultimately go anywhere, right, I mean, that was one
Speaker 1: of those ideas where it actually preceded things like MySpace
Speaker 1: and Facebook. So so he he was onto something. He
Speaker 1: saw the he saw the horizon. He saw that social
Speaker 1: networking could be a big thing. It's just that his approach,
Speaker 1: perhaps it wasn't the right approach, perhaps it didn't come
Speaker 1: at the right time. It might have been some sort
Speaker 1: of combination of these and other factors as well. At
Speaker 1: any rate, it did not take off like a MySpace
Speaker 1: or later on a Facebook. No, No, that's that's true. UM.
Speaker 1: And it's also interesting to note that none of the
Speaker 1: companies that he had uh started before and he they're
Speaker 1: conflicting reports about the number of companies that he was
Speaker 1: starting and or involved with. Um, they're a handful, like
Speaker 1: the ones that that we've mentioned. UM. Apparently too, he
Speaker 1: has been quoted as saying that there were far more
Speaker 1: failures than successes too, so he may have been involved
Speaker 1: with more of them. But they're not naming companies. We're
Speaker 1: not talking about somebody like you know, Trip Hawkins, who's
Speaker 1: known for being a you know, he he was you know,
Speaker 1: founder of e A and you know, got into digital
Speaker 1: chocolate later. Um. But yeah, I mean, he wasn't known
Speaker 1: as a gaming industry giant who started a new a
Speaker 1: new gang of gaming company. This is his first gaming
Speaker 1: for a and uh there's also some mild controversy about
Speaker 1: the name Zinga. He has been quoted as saying is
Speaker 1: named after his uh dearly departed puppy dog, bulldog. Yeah.
Speaker 1: And then there's another story that I read on a
Speaker 1: totally different article which said that he had a friend
Speaker 1: who used the online handle Muzinga often people would just
Speaker 1: refer to him as Zinga, and that he had named
Speaker 1: his dog after this person. Uh, but that's sort of
Speaker 1: the same story, but only yeah, a little yeah, a
Speaker 1: little bit more of no tracing it back where does vend?
Speaker 1: But anyway, he called the company's He hired on some
Speaker 1: folks like h Eric Scheiermeyer, Michael Luxton, Justin Waldron, Kyle Stewart,
Speaker 1: Scott Dale, Kevin Hagen, Steve Shuttler, and Andrew Trader. And
Speaker 1: he had these guys together, and his idea was to
Speaker 1: create these simple, uh easy to learn, easy to play
Speaker 1: games because he was he kind of equated it to
Speaker 1: going to a cocktail party and hanging out and just
Speaker 1: chatting for a while. You know, it's a pleasant experience.
Speaker 1: You don't tend to have super deep conversations at a
Speaker 1: cocktail party unless you're going to a cocktail party held
Speaker 1: by nuclear physicists. Um. Then in general, you tend to
Speaker 1: talk about a lot of different things and you don't
Speaker 1: get too far down into the service, but you can
Speaker 1: have an entertaining conversation sort of the same thing he
Speaker 1: wanted to do with these games, Like he saw the
Speaker 1: games that other companies were making that were these very deep,
Speaker 1: rich experiences, um, lots of work developing the world and
Speaker 1: the physics or or the game mechanics, and he said, well,
Speaker 1: you know that there is a place for that, But
Speaker 1: what if we concentrate on games that were meant for
Speaker 1: a more casual player, someone who you know, enjoys the
Speaker 1: game mechanics, the gameplay is fun and has some sort
Speaker 1: of reward system in place so that the player feels
Speaker 1: like they should keep playing. But it doesn't need to
Speaker 1: be as deep, and it doesn't have to exist on
Speaker 1: its own. It doesn't have to be like, uh, you
Speaker 1: don't have to go to a store and buy a
Speaker 1: box that has a disk in it and bring it
Speaker 1: home and and install it. It's something that could exist
Speaker 1: on top of another existing platform, whether that's a web
Speaker 1: page or a social network as it would turn out later,
Speaker 1: or a mobile device. Yeah. Um, and uh. One of
Speaker 1: the one of the earliest maneuvers that I think set
Speaker 1: zinga apart from its competitors was, uh, it launched games
Speaker 1: on my Space because that was, you know, the network
Speaker 1: of choice, but it also it was hedging its bets
Speaker 1: on the new competitor, Facebook. Yeah, back in two thousand
Speaker 1: and seven. It's easy for us to forget now that
Speaker 1: my Facebook has beaten a billion subscribers, right. Facebook is
Speaker 1: now over one billion active subscribers or accounts. I'm betting
Speaker 1: that some of those people have multiple accounts, probably just again,
Speaker 1: but still that's a lot of accounts. Over five million
Speaker 1: people have accounts on Facebook. Um. But yeah, yeah. Back
Speaker 1: in the day, you know, my Space was dominating for
Speaker 1: the longest time, and Facebook was only open to college students.
Speaker 1: So for a while, a lot of people thought that
Speaker 1: Facebook was going to be an also ran it was
Speaker 1: never going to catch up. That, of course, is not
Speaker 1: what happened. And and now we're in an era where
Speaker 1: my Space is launching yet another redesign, dramatic redesign to
Speaker 1: see if they can can can emerge from the dull
Speaker 1: drums and perhaps become a player again, and it may
Speaker 1: very well happen. It's easy to write off my Space
Speaker 1: after its precipitous fall, but we've seen companies rise and
Speaker 1: fall and rise again before, so you know, you never
Speaker 1: say never at any rate. Like like Chris was saying, Zinga,
Speaker 1: they were looking ahead and saying, you know, we want
Speaker 1: to make sure that are what we're producing ends up
Speaker 1: getting to as many people as possible. And that means
Speaker 1: we can't just assume that one platform is always going
Speaker 1: to be the way people access content online. And so
Speaker 1: they started to create games that would work on Facebook.
Speaker 1: And you know, Facebook had a very limited a p
Speaker 1: I at the time, like there were an application programming interface, right,
Speaker 1: So Facebook was not a platform for other programs early
Speaker 1: in its existence. Certainly no it that eventually changed, and
Speaker 1: they did experiment with it fairly early, but it was
Speaker 1: you know, it was until fairly recently that it actually
Speaker 1: became a viable platform for a company to launch an app.
Speaker 1: But back in two thousand seven, Zinga released a game
Speaker 1: on Facebook, and it was a social poker game, free
Speaker 1: to play, Texas Hold Him poker. Okay, so Zinka did
Speaker 1: a very smart thing here, because you know, this is
Speaker 1: back when poker, which had been around for a very
Speaker 1: long time, uh you know, just sort of sitting there
Speaker 1: under the surface, waiting to be rediscovered. And that's about when,
Speaker 1: you know, in the mid two thousand's, that's when people
Speaker 1: were really getting back on board, which was really strange.
Speaker 1: I mean it just seemed to come out of nowhere, like, uh,
Speaker 1: suddenly there was this huge focus on poker in general
Speaker 1: and Texas hold Him in particular particular. ESPN started showing
Speaker 1: it and thought, wow, this has become a sport, and uh,
Speaker 1: you know, there was a lot of interest. I mean
Speaker 1: I've I've watched my share of World Series of Poker
Speaker 1: tournaments and it is a very fascinating thing. And it's
Speaker 1: you know, even by two thousands seven that that fervor
Speaker 1: had not really died down. I would say that perhaps
Speaker 1: today there's not quite as much interest and as there
Speaker 1: used to be. I mean we used to see like
Speaker 1: celebrity poker tournaments and on television all the time, but
Speaker 1: it's still there's still an interest there. And uh, so
Speaker 1: Zinga said, well, you know, let's produce a game that
Speaker 1: is on a social network that's getting a lot of attention,
Speaker 1: and let's do it a game that's actually popular in
Speaker 1: the UH and the zeitgeist at this moment. Let's let's
Speaker 1: combine these things and we're going to try and capitalize
Speaker 1: on it. And it worked. Yeah, the UH. It's kind
Speaker 1: of interesting too because this is where social gaming is
Speaker 1: now pretty big thing, and so is casual gaming. Again,
Speaker 1: it's sort of like poker these things. Well, social gaming, no,
Speaker 1: but casual gaming has. It's been around for forever and ever,
Speaker 1: you know. But the thing is, it wasn't the big
Speaker 1: money maker that it is now, and it is thanks
Speaker 1: in part two companies like zinga UM who found ways
Speaker 1: to get people back involved with it. You know, you
Speaker 1: play let's say you play a game on a social game,
Speaker 1: a casual game on a UM you know, online somewhere. Okay,
Speaker 1: so you've played it, and you know, after a couple
Speaker 1: of weeks, you know that the interest kind of waynes
Speaker 1: You know, I've played it. I love that game, and
Speaker 1: you'll come back to it again in the future maybe,
Speaker 1: but you know, it's you get away from it because
Speaker 1: you lose track of you know, you have something you
Speaker 1: gotta do on Tuesday night. Now on Wednesday night's kind
Speaker 1: of packed two and after a couple of weeks ago,
Speaker 1: I just don't feel like going back. But Zinga introduced
Speaker 1: the the concept of adding poker chips to this game.
Speaker 1: But this is one of those things that Zinga has
Speaker 1: developed a reputation for acting in sort of weird ways
Speaker 1: on this this Holdham Poker game. They they had a
Speaker 1: thing where they you could, you could add more friends. Um,
Speaker 1: you know, they wanted you to get poker chips and
Speaker 1: if you would, uh you know, help them, uh you know,
Speaker 1: download by downloading this key. What almost Yeah, this was
Speaker 1: one of those things where actually this would come back
Speaker 1: to hunt Pinkas later where he he essentially said in
Speaker 1: a later interview that he made every horrible decision you
Speaker 1: could make in order to make money. He was trying
Speaker 1: to find different ways to generate revenue, and it didn't
Speaker 1: matter what impact it would have on the user experience.
Speaker 1: That's that's how people have interpreted those words. Now, whether
Speaker 1: Pinkas really meant truly that he tried every horrible thing
Speaker 1: or not doesn't really matter, because as people in later years,
Speaker 1: uh said, you know, they just went ahead and interpreted
Speaker 1: it as that and that became the reality, which is
Speaker 1: kind of you know, just says be careful what you say,
Speaker 1: because because later on, even if you're saying something and
Speaker 1: you're exaggerating in order to make a point, people may
Speaker 1: later take that exaggeration as the gospel truth. And whether
Speaker 1: or not it was, that's how it's been interpreted. So yeah,
Speaker 1: Pinkas said, we tried all these different things, and if
Speaker 1: you downloaded this wiki, the idea was that you would
Speaker 1: download this this tool and it would in the game,
Speaker 1: you would end up being rewarded with more poker chips.
Speaker 1: But again it was a negative experience for most users.
Speaker 1: And and even Pinkas said, like, I couldn't figure out
Speaker 1: how to remove this thing once I installed it. So uh,
Speaker 1: there were other ways of trying to generate revenue, and
Speaker 1: in fact, uh, the game was profitable for Zinga. They
Speaker 1: ended up raising some money. It wasn't a whole lot
Speaker 1: in the grand scheme of things, but it was important
Speaker 1: to Pinkas that they they show that the company was
Speaker 1: capable of generating revenue before he went out to seek
Speaker 1: around of funding. He didn't want to go out and
Speaker 1: hit venture capitalists without first being able to say, look,
Speaker 1: I can prove to you that what we're doing has
Speaker 1: a play in this market. This company has a demonstrable
Speaker 1: value because we're able to make money. Otherwise you're just
Speaker 1: going up to catalists and saying, hey, look, this game
Speaker 1: is really popular, a lot of people are playing it.
Speaker 1: You should give me money. Like, until you can prove
Speaker 1: me money, until you can prove that all those people
Speaker 1: are generating revenue for you, it's really hard to get
Speaker 1: the investors on board. I mean Twitter has seen this,
Speaker 1: uh for for years. Since Twitter started, they had a
Speaker 1: lot of users, but for the longest time, there was
Speaker 1: really no revenue generating uh operation there. I mean there's
Speaker 1: just very little, if any, and so uh you know. Essentially,
Speaker 1: the way that to convince venture cabalists to invest in
Speaker 1: something like Twitter is to say it's a huge, huge service.
Speaker 1: Millions of people are using it and depending upon it. Uh,
Speaker 1: the gap that it would leave if it went away
Speaker 1: is enormous. Therefore it is valuable. All we have to
Speaker 1: do is figure out the a of tapping into that value.
Speaker 1: And that's enough for some investors. But Pinkus was like, no,
Speaker 1: I want to make sure that I have a good
Speaker 1: story to tell when I go and visit these venture capitalists,
Speaker 1: and he did, and so in two thousand and seven
Speaker 1: he actually had the first round of UH venture capital
Speaker 1: and and was able to get investments. Then he was
Speaker 1: also UM well back in January two thou because it
Speaker 1: was late two thousand seven when we started pursuing it.
Speaker 1: January two tho eight, they raised about five million dollars
Speaker 1: from various venture capital funds and then UH six months
Speaker 1: later they did a second round of fundraising and raised
Speaker 1: another twenty nine million. And at that point they also
Speaker 1: hired on someone as a sort of consultant named Bing Gordon,
Speaker 1: who was a former chief creative officer with Electronic Arts.
Speaker 1: So here is someone who has had experience with the
Speaker 1: major video game company coming on board with Zinga. UH.
Speaker 1: The the the title most often given to Mr Gordon
Speaker 1: is Consigliari, which, for those of you who are fans
Speaker 1: of the Godfather trilogy will think, wow, so some sort
Speaker 1: of quote unquote family consultant has joined on. Well, it's
Speaker 1: it's kind of funny since Mafia Wars was the the
Speaker 1: big cross platform hit for Zinga at that point, which
Speaker 1: may may or may not be related. Yeah, and also
Speaker 1: the the acquisition of Yoville, which is still you know,
Speaker 1: moving along out there. They they have continued to support
Speaker 1: that game. Now, Mafia Wars raises one of the big
Speaker 1: big stories within Zinga, which is something that would haunt
Speaker 1: them for years. Um a few short years that have
Speaker 1: existed between when Mafia Wars has come out and today.
Speaker 1: But one of the issues about Mafia Wars was that
Speaker 1: people pointed out there was an earlier game called Mob Wars, which, um,
Speaker 1: Mafia Wars bore a certain similarity to Mob Wars, some
Speaker 1: would say, to the point of identity. This is another
Speaker 1: one of those points which the uh Zinga detractors like
Speaker 1: to make, um, which is and it's not completely unwarranted.
Speaker 1: Um yeah that will I will neither say that it
Speaker 1: is or isn't warranted to say that many of Zinga's
Speaker 1: games bear a striking resemblance to other popular, successful social
Speaker 1: network games. And and there are there the first right. Well,
Speaker 1: there have been people from Zinga, like former employees, who
Speaker 1: have said that the message, essentially, according to these former employees,
Speaker 1: was that find games out there that work, copy them,
Speaker 1: and do whatever you have to do to be as
Speaker 1: popular or more popular than the previous game. Now, whether
Speaker 1: or not that was actually a directive within Zinga, I
Speaker 1: cannot say. This may very well be the words of
Speaker 1: employees who have uh, you know, an ax to grind
Speaker 1: against the company, and they're saying whatever they want to
Speaker 1: kind of disparage it. I don't know. I don't want
Speaker 1: to pass judgment seeing as how I don't have that
Speaker 1: direct experience. But there have been people who have essentially
Speaker 1: accused Zinga, former employees who have accused Zinga of purposefully
Speaker 1: setting out to copy other games and to use the
Speaker 1: popularity of Zinga and its broad reach to essentially, uh
Speaker 1: co opt those games from the original creators. Now, with
Speaker 1: the case of Mob Wars and Mafia Wars, there's some
Speaker 1: more murky issues there. Uh. The Zinga executives were saying
Speaker 1: things along the lines of, you know, we were in
Speaker 1: talks of actually acquiring Mob Wars, but then the guy
Speaker 1: who designed Mob Wars learned about how Zinga was going
Speaker 1: into selling virtual goods in order to generate revenue. Here's
Speaker 1: another way of generating revenue with a free to play game.
Speaker 1: So besides convincing you to download tools that you will
Speaker 1: never get rid of as a way of generating revenue
Speaker 1: by making a partnership with whomever is creating the tool.
Speaker 1: Another way is to sell virtual goods that give you
Speaker 1: some sort of edge or some sort of uh customization
Speaker 1: ability within a virtual game for real money. And once
Speaker 1: the guy from Mob Wars saw that, then he began
Speaker 1: to incorporate those same features within Mob Wars. So Zinga
Speaker 1: has said, wait, no, the guy from mob Wars was
Speaker 1: copying us. So yes, our game is also about mafia warfare.
Speaker 1: But our game was built a round this idea of
Speaker 1: selling virtual goods. His wasn't until he heard about it
Speaker 1: from us. So there's this sort of there's this crossfire
Speaker 1: of accusations between the two groups, right, But in the
Speaker 1: end you have Mafia Wars coming out, and there were
Speaker 1: lawsuits about you know, infringing copyright, infringing intellectual property. And
Speaker 1: this was not the one and only time this happened
Speaker 1: to Zinga. That's happened, you know, in other with other
Speaker 1: games as well, um including one that one of the
Speaker 1: more popular games that Zinga pushed out was Farmville, and
Speaker 1: there was another farm based game that again people said,
Speaker 1: this bears a certain resemblance to this other game. And
Speaker 1: again there are conflicting reports about whether or not the
Speaker 1: people at Zinga were aware of that game, whether they
Speaker 1: were purposefully trying to copy it, or if this was
Speaker 1: just a parallel development issue. Um. And again we don't
Speaker 1: have the whole story right. One one one report suggests
Speaker 1: that one of the venture capital fund UH fund managers
Speaker 1: had said, or or I guess the people at the
Speaker 1: venture capital firm had said, you know, why don't you
Speaker 1: do a farm game? Yeah, I don't know. It's it's
Speaker 1: it's very difficult to tell. Um. And uh. You know,
Speaker 1: there are a lot of stories that fly around when
Speaker 1: you when you have this kind of corporate drama going on. Um.
Speaker 1: But yes, certainly, uh, certainly Farmville is another one of
Speaker 1: those games that that you know, came out at the
Speaker 1: same you know, time frame, a little later than another
Speaker 1: very popular farm game, So you know, it's easy to
Speaker 1: make that comparison. Yeah, and uh. And also this is
Speaker 1: the time where if you were on Facebook during this time,
Speaker 1: you began to get irritated if you were not a
Speaker 1: fan of these games at the numerous UH notifications you
Speaker 1: would received whenever your friends were raising sheep or planting corn,
Speaker 1: and you had learned that there field of corn needed
Speaker 1: watering or whatever. Okay, enough anyway, So yeah, this was
Speaker 1: this was a time where people who were not fans
Speaker 1: of this game became haters of the games because their
Speaker 1: their Facebook notifications were starting to fill up with these
Speaker 1: these game notifications which you could hide, and many of
Speaker 1: us chose that option immediately. Well, um, you know many
Speaker 1: many people have talked about Mark Zuckerberg, the founder of Facebook,
Speaker 1: and whether or not he sees everybody's you know, personal
Speaker 1: privacy or you know everybody wants to have these connections
Speaker 1: to your friends, and you know these these questions. Well,
Speaker 1: Mark Pinkas is another person who basically says, you know, hey,
Speaker 1: playing games is fun when you do it socially. So
Speaker 1: the Zinga games, uh, from when I first became aware
Speaker 1: of them, at least, which is I would I would
Speaker 1: guess Farmville. I think I became familiar with Mafia Wars afterward. Um,
Speaker 1: but yeah, that's one of the very first things you do,
Speaker 1: and you know, I wanted to try it out, see
Speaker 1: what it was all about. And one of the very
Speaker 1: first things they ask you to do when you when
Speaker 1: it comes on and say, hey, what other friends and
Speaker 1: they look at your Facebook list of friends. Um, you know,
Speaker 1: they made it possible to look at just the ones
Speaker 1: that are playing the game, but for the most part,
Speaker 1: they say, hey, who in this entire list of friends
Speaker 1: wants a free mail of hey? Or you know what?
Speaker 1: You know, wouldn't these people really like to play? And
Speaker 1: you know you're playing experience will be much better the
Speaker 1: more friends you have playing it. And you know, there
Speaker 1: is something about social gaming I don't I don't mean
Speaker 1: to disparage social gaming at all. No, I mean there
Speaker 1: are plenty of social games out there that I think
Speaker 1: are lots of fun, particularly if you have a lot
Speaker 1: of friends who are also into that game. And then
Speaker 1: there are games out there that if you're the only
Speaker 1: one playing, they aren't fun at all. You know, you
Speaker 1: need other people playing that game to make it worthwhile.
Speaker 1: I would argue that with my experiences with Zinca tie
Speaker 1: Ols that that's very much the case with a lot
Speaker 1: of these vill games. You didn't see the dash right before, Yeah,
Speaker 1: I mean, if you, if you, if you, well, there's
Speaker 1: an option. This is another one of Zinga's uh you
Speaker 1: know when when they've been on the forefront of this movement,
Speaker 1: is hey, you don't have to if you don't want
Speaker 1: to share this with fifty of your friends, that's fine.
Speaker 1: You can pay up real money if you'd like to
Speaker 1: have in game money, that would be just fine with us. Right.
Speaker 1: So again we're getting over to that virtual goods for
Speaker 1: real money, and in fact, that became the chief way
Speaker 1: that Zinga made money for a long time. Like the
Speaker 1: revenue that Zinga made came from selling virtual goods. And
Speaker 1: of course with that model, you want as many people
Speaker 1: as possible playing your game. Now, the game itself is free,
Speaker 1: So just because you have a half million people playing
Speaker 1: a game doesn't mean you're making money off of them.
Speaker 1: But even if only a small percentage of that million
Speaker 1: are ponying up real cash for virtual goods, that's a
Speaker 1: lot of money. I mean, when you're talking about huge
Speaker 1: numbers like that, even a small percentage can be a
Speaker 1: significant amount of cash. And that's also why Zinga released
Speaker 1: so many games. It wasn't like you know, a game
Speaker 1: company that might have one or two titles, maybe maybe
Speaker 1: as many as six titles in a year. They're releasing
Speaker 1: games all the time. And uh Pincus is not afraid
Speaker 1: to pull the plug on a game if he sees
Speaker 1: that it's not really working. He's he's killed off games
Speaker 1: early early on in the process when he said, Okay,
Speaker 1: no one is really sharing this among this test group.
Speaker 1: That tells me that this is not a very sticky game.
Speaker 1: Sticky meaning that this is the sort of thing that
Speaker 1: people like to go back to and they like to
Speaker 1: share it. Uh. Once he saw that, he said, all right,
Speaker 1: let's get rid of that, because we shouldn't be dedicating
Speaker 1: any resources to something that's not getting results. Now, this
Speaker 1: also meant that people who worked for Zinga might be
Speaker 1: working on a project that ultimately could get the plug
Speaker 1: pulled on it shortly after launch, and you had such
Speaker 1: a quick turnaround rate that you were always working. That
Speaker 1: that working for Zinga could be a very demanding experience.
Speaker 1: And uh, in fact, I did a look. I looked
Speaker 1: at the at some surveys online about employee reaction to
Speaker 1: working for Zinga, and uh of the people who worked
Speaker 1: there said that they would recommend Zinga to a friend
Speaker 1: who was looking for employment. So fifty just over half
Speaker 1: would say Zinga is a good place to work. And
Speaker 1: that study, well, the the the the latest I saw
Speaker 1: was FORLVE, but that could have been early because we're
Speaker 1: gonna get into Zinga's more recent experience in a little bit.
Speaker 1: But the other thing was that fifty nine percent said
Speaker 1: they thought that Pinkus was doing a good job as
Speaker 1: CEO of Zinga, So that means were either not impressed
Speaker 1: or actively they did not like what he's doing. Yeah. Well,
Speaker 1: if you look at it strictly as a business model, um,
Speaker 1: the game The games themselves are brilliant because not only
Speaker 1: are they social games. Um, they encourage you to add
Speaker 1: friends and play with your your Facebook friends. But in
Speaker 1: addition to that, they want you to you know, spend
Speaker 1: a few real life dollars in there as well. I
Speaker 1: mean you can, you can play without spending any real
Speaker 1: cash and and in fact I have never spent a
Speaker 1: cent on any of the games. However, I can tell
Speaker 1: you that playing it with no or few friends without
Speaker 1: spending cash makes them maddeningly slow and difficult to achieve anything.
Speaker 1: They like to encourage you to buy a special building
Speaker 1: or a specific decoration for your castle slash farm, slash city,
Speaker 1: slash whatever. Yeah, um, and you know you can. You can.
Speaker 1: You can maybe have your friends give you one, or
Speaker 1: you could you know, spend five dollars and and earn
Speaker 1: enough in game cash to do that, or or maybe
Speaker 1: you're building something, a large building in your your world,
Speaker 1: and uh, you know, if you just fork over a
Speaker 1: few dollars, it will happen that much faster, and and
Speaker 1: it makes more in game money than anything else. And
Speaker 1: the thing is, all of a sudden, you've encouraged your
Speaker 1: friends to start playing, and they're all spending five dollars,
Speaker 1: ten dollars of their money and so on. And so
Speaker 1: it's a brilliant business model if you can get enough
Speaker 1: people to do it and you and also they pointed
Speaker 1: out that once they get this network in place, they
Speaker 1: don't have to win over everyone who's playing every time,
Speaker 1: because if they get just a few, If I have
Speaker 1: a lot of friends playing games on Zinga and then
Speaker 1: a few of them start playing a new game, that
Speaker 1: may tempt me to try out the new game game
Speaker 1: as well. And so I know, the idea is that
Speaker 1: once you get that big net of users, that network
Speaker 1: of users, then you've you've got enough seeds planted Farmville
Speaker 1: or otherwise to try and convince more people to try
Speaker 1: out new games as you release them. So even when
Speaker 1: you get tired of an old game, a new game
Speaker 1: might come along and you want to play that, And
Speaker 1: that did work for a while. In fact, when that
Speaker 1: article that we were citing earlier, the venture Beat article,
Speaker 1: when that was written back in two thousand eleven, Uh,
Speaker 1: Zinga was on the rise. I mean they were doing
Speaker 1: really really well. Uh they held an i p O
Speaker 1: and uh and that I p O there their stock
Speaker 1: was originally that's initial public offering offering, thank you. Uh,
Speaker 1: they held that back in December eleven. So at the
Speaker 1: end of eleven they have this i p O. And
Speaker 1: originally their stock was priced at ten dollars. By March,
Speaker 1: that price had gone up to fourteen dollars fifth sense
Speaker 1: per share, so the stock was was increasing in value.
Speaker 1: But some stuff has happened since then. One of those
Speaker 1: things is a pretty spectacular deal that Zinga made with
Speaker 1: another company called o MG Pop, which created a little
Speaker 1: game called draw Something. Draw Something was incredibly popular, uh,
Speaker 1: Like shortly after it came out. That's pretty much what
Speaker 1: I heard all of my friends in the tech industry.
Speaker 1: That's all I heard from them, like on their Twitter
Speaker 1: feeds and everything. They talked about draw Something and how
Speaker 1: fun it was and um, and it did have a
Speaker 1: pretty incredible adoption rate, and oh yeah it was. It
Speaker 1: was soaring. They were the darling, sudden darling of the
Speaker 1: UH mobile and online gaming casual gaming thing because basically
Speaker 1: was a drawing game where the your opponent wasn't actually
Speaker 1: your opponent, they were actually working with you. Yeah, essentially. Yeah,
Speaker 1: So the game was incredibly popular, and so Zinga looked
Speaker 1: at that and said, well, we should take advantage of this.
Speaker 1: We should use this capital that we've raised through the
Speaker 1: I p O and just through our revenues and everything
Speaker 1: else and UH and purchase this company because it would
Speaker 1: be a very valuable asset in our our repertoire. And
Speaker 1: so they did for around a hundred and eighty million dollars.
Speaker 1: And the problem was that they bought that company just
Speaker 1: before it hit its peak in UH in adoption, and
Speaker 1: then shortly thereafter people began to lose interest in the
Speaker 1: game through no fault of the game. This is just
Speaker 1: the way we work as human beings. Like we find
Speaker 1: something new and fun and we go crazy about it,
Speaker 1: and then after we get used to it for a while,
Speaker 1: we just stopped thinking about it so much and we
Speaker 1: don't use it as much. Um. The same thing is true,
Speaker 1: very true with a lot of casual games. In fact,
Speaker 1: Zinga seemed that over its history, and that's one of
Speaker 1: the reasons why Zinga releases these games so frequently. It's
Speaker 1: because you can't just release a game. Even if you
Speaker 1: created a truly amazing game, like something that someone would
Speaker 1: play and there'd be nothing but praise said about that game.
Speaker 1: It has a shelf life, you know, and and you
Speaker 1: you might have the long tail experience where you've got
Speaker 1: people who are finding the game late and adopting it late,
Speaker 1: but it's never going to be as many or as
Speaker 1: intense as that early era when people first discover it. Well,
Speaker 1: same thing happened with draw Something and so even though
Speaker 1: it was this phenomenal success at the time when Zinga
Speaker 1: was looking into buying it, surely thereafter people stopped playing it,
Speaker 1: or at least huge numbers of people stopped playing it
Speaker 1: and UH and so it suddenly looked like Zinga had
Speaker 1: paid way too much money for a company, like they
Speaker 1: had seriously overvalued o MG Pop when they acquired it.
Speaker 1: That's not the only company that Zinga has acquired. They've
Speaker 1: acquired other companies as well. In their UH. Their quest
Speaker 1: to succeed as a company. Um and in other cases
Speaker 1: it's it's kind of similar. In fact, there were ties
Speaker 1: where Zinga was looking at things like a pop Cap games,
Speaker 1: UM that was not bought by Zinga. There was another
Speaker 1: company that swept that up. Yeah. As a matter of fact, Uh,
Speaker 1: Zinga reportedly made a bigger offer for um the indie
Speaker 1: legend gaming legend PopCap than uh than Electronic Arts, the
Speaker 1: eventual winner did, but they actually turned it down. Uh.
Speaker 1: And of course now they have gone. By the way.
Speaker 1: The pop Cap is known for titles like the Jeweled
Speaker 1: Plants Versus Zombies Zuma and uh you know. They they
Speaker 1: had made the move from being a computer based developer
Speaker 1: to the mobile world. Um and uh you know also
Speaker 1: to um uh also to the social gaming sites you
Speaker 1: know Facebook, they've you know, but Jeweled Blitz and zooma
Speaker 1: Blitz are among the largest, most durable titles that I've seen. Um,
Speaker 1: you know, come and go on the Facebook platform and
Speaker 1: uh you know they it was certainly one of those
Speaker 1: those companies that have proven its ability to create new titles,
Speaker 1: unlike some other people. UM. So you know that there
Speaker 1: was definitely something there and uh, despite the bidding war, uh,
Speaker 1: and the apparent, according to reports, winner being Zinga. They
Speaker 1: decided to go with e A. Now why did they
Speaker 1: decide to go with e A. That's a matter of
Speaker 1: some debate. It's it's sort of unclear. They haven't said specifically,
Speaker 1: but rumors, you know, rumors of course spread when something
Speaker 1: like that happens, and they said, well, you know, maybe
Speaker 1: there's something there, maybe there's some sort of personal conflict,
Speaker 1: or maybe they knew something about Zinga, or at any rate,
Speaker 1: Zinga in in hit its peak and then dropped. The
Speaker 1: stock price, dropped, the the adoption rate for the game's dropped. Um.
Speaker 1: Things just turned for the worst in every way really
Speaker 1: for Zinga, uh, to the point where I think the
Speaker 1: lowest price so far as of the recording of this
Speaker 1: podcast was two dollars and thirty one cents a share.
Speaker 1: And now remember it launched at ten dollars a year
Speaker 1: and hit a peak of fourteen dollars and fifty cents
Speaker 1: a share earlier this year. You know, it hasn't even
Speaker 1: been a whole year since that happened. And as of
Speaker 1: the recording of this podcast, we were recording on October twelve,
Speaker 1: and this morning, before the the market opened, the price
Speaker 1: was at two dollars and forty three cents a share.
Speaker 1: It has dropped since we started recording this podcast to
Speaker 1: two dollars and four two cents a share. Yeah, so
Speaker 1: that's actually up it had it had gone down a
Speaker 1: penny or two below that. Okay, So it's yeah, No, granted,
Speaker 1: moment by moment this value changes, So it's you always
Speaker 1: have to take that with a grain of salt. But
Speaker 1: but I've heard, I've heard a lot of you know,
Speaker 1: I was looking into a lot of projections. I was
Speaker 1: looking to a lot of projections, and most of them
Speaker 1: had the stock price valued at around three dollars for
Speaker 1: the next twelve months or so. Now, granted, it took
Speaker 1: less than twelve months for it to go from fourteen
Speaker 1: fifty to one, but you know, that's that's sort of
Speaker 1: the projections by a lot of analysts right now. And
Speaker 1: part of that is because there seems to be a
Speaker 1: decreasing tendency for people to play social games on or
Speaker 1: games at all, on social networks. There was a survey
Speaker 1: done in twenty that found that, uh, the fifty six
Speaker 1: of students who were surveyed in this study said they
Speaker 1: planned on playing fewer social games in the next year.
Speaker 1: And uh so that you know, more than half of
Speaker 1: the students were saying, I don't think I'm gonna be
Speaker 1: playing as much. It's just not for me. That was
Speaker 1: back in So if that trend is more widespread than
Speaker 1: just among students, then that would suggest that perhaps, you know,
Speaker 1: social gaming was one of those early distractions that was
Speaker 1: very you know, had a had a big impact when
Speaker 1: it first came out, but it's becoming increasingly difficult to
Speaker 1: replicate that in the social gaming world. That's not to
Speaker 1: say that someone's not gonna come around and create a
Speaker 1: game that just knocks everybody socks off. It may very
Speaker 1: well happen today or tomorrow or you know, a year
Speaker 1: from now. But the trend is a decreasing interest in
Speaker 1: social games in the online platform. Um, there's part of
Speaker 1: that might be made up for mobile. I mean, you could,
Speaker 1: you know, if these company are able to really concentrate
Speaker 1: on the mobile experience, they might be able to recapture
Speaker 1: that because mobile is still a very popular platform. In fact,
Speaker 1: it's you know, increasingly popular. So that might be a
Speaker 1: way that Zinga can turn things around. Uh, and there
Speaker 1: are a lot of other ways I mean, I'm not
Speaker 1: a I'm not a businessman by any stretch of the imagination.
Speaker 1: So while while Zinga's plight looks great indeed to my eyes,
Speaker 1: it doesn't mean that Pinkinson team can't turn it around,
Speaker 1: or perhaps, you know, maybe some other company will come
Speaker 1: in and purchase Zinga. I've seen some speculation about Facebook,
Speaker 1: although at this point I'm wondering if Facebook would look
Speaker 1: at Zinga and say, this looks like it's something that
Speaker 1: we would have wanted four years ago, but not now. Yeah. Yeah, Well,
Speaker 1: there's certainly a lot of intellectual property to be had
Speaker 1: right there, which often is under some contention as to
Speaker 1: whether or not that truly blonds Zinga. But yes, go ahead,
Speaker 1: yeah no, And and that's you know that this is
Speaker 1: where we get into that hazy well you know, it's
Speaker 1: a farm game, so you know who you know, is
Speaker 1: this sufficiently different enough from that one? Now that that's true?
Speaker 1: But you know, of course there there are some some
Speaker 1: more original titles, and uh, you know, I think I
Speaker 1: think it's possible that um, that may happen. Although you know,
Speaker 1: when I happened to go look at the stock price
Speaker 1: just a moment ago, there is also news again as
Speaker 1: of the time we're starting this podcast that Mark Pinkis
Speaker 1: is suggesting he wants to take the company private again.
Speaker 1: So yeah, there were no there was something else. I
Speaker 1: didn't mention this when we were talking about it, but
Speaker 1: I did. There was another part of that Venture Beat
Speaker 1: article that was kind of interesting about how the company
Speaker 1: had made uh some money back in back in two
Speaker 1: thousand and eight, the revenue for Zinga was around nineteen
Speaker 1: point four million dollars, but because it was a private company,
Speaker 1: it didn't have to release the fact that their cost
Speaker 1: or that their losses amounted to twenty two point one
Speaker 1: million for the year, meaning that their costs far outweighed
Speaker 1: their revenue. But it was a private company, so there
Speaker 1: was no requirement for them to release that information. But
Speaker 1: as a as a publicly traded company, you have to
Speaker 1: do that. So when things are bad, you can't cover
Speaker 1: it up. You know, you can try and obfuscate it
Speaker 1: with language when you're doing your press conference and talk
Speaker 1: about the opportunity you have. If you hear the word
Speaker 1: opportunity said a lot, that can sometimes be a red flag.
Speaker 1: I'm not saying it's the red flag in every case.
Speaker 1: So if you just recently heard the word opportunity at
Speaker 1: your all hands meeting. That does not necessarily mean you
Speaker 1: need to panic, but it's sometimes one of those little
Speaker 1: words that can indicate that there's uh less than positive
Speaker 1: things going on on the business side, UM problems, our opportunities. Well,
Speaker 1: you have to think of it that way, right, I
Speaker 1: mean if you don't. If you don't think of it
Speaker 1: that way, then not only is morale an issue, but
Speaker 1: you actually do start to sabotage yourself in turning things around.
Speaker 1: So not to really put down anyone who tries to
Speaker 1: look at things as opportunities, I actually think that's a
Speaker 1: pretty positive way to go about it, as long as
Speaker 1: you're being genuine, right, I mean if you're being insincere
Speaker 1: in calling it an opportunity, that's a problem. But if
Speaker 1: you look at and say, all right, this message that
Speaker 1: I'm getting here says we're not doing as good a
Speaker 1: job as we need to. What do we need to
Speaker 1: do to change to do as good a job? There
Speaker 1: been some suggestions that ZINGA should cut costs by perhaps
Speaker 1: uh laying off employees and consolidating departments. One of the
Speaker 1: flip sides to that is if you start cutting costs.
Speaker 1: Then you're also cutting into the resources you have to
Speaker 1: develop new games, so you're actually making it harder on
Speaker 1: yourself to create the product that will help make the
Speaker 1: money that you need to make in order to become
Speaker 1: profitable again or to to turn things around. So it
Speaker 1: becomes this kind of domino effect, right. You start to
Speaker 1: cut costs, you start to lay people off, you start
Speaker 1: to consolidate departments. It becomes harder for you to make
Speaker 1: a good game because it's harder for you to make
Speaker 1: a good game, fewer people are following you, and so
Speaker 1: it just you know, continues until your company crumbles away.
Speaker 1: So it's a really challenging thing. And I don't have
Speaker 1: all the answers because you know, it's easy to say no,
Speaker 1: keep everybody make good stuff. Like yeah, that's that's that's
Speaker 1: the kind of leadership that doesn't get you anywhere. That's
Speaker 1: that would be my leadership's style, kind like Homer Simpson,
Speaker 1: are you guys working? Yes? Could you work harder? I
Speaker 1: guess so, okay? Do that? That's that's kind of my
Speaker 1: leadership style, which is why I'm a senior writer. All right, then,
Speaker 1: uh well, I guess that kind of wraps up where
Speaker 1: Zinga is right now. And again this this is a
Speaker 1: company that's had a real roller coaster story and and
Speaker 1: some of it's a little shady and some of it's
Speaker 1: a little uh you know uh on the level of
Speaker 1: of could this be creating it yet another bubble within
Speaker 1: the tech industry? Um, it's business. It's business. Yeah, and
Speaker 1: and it just like any other business venture, you cannot
Speaker 1: count out a company until it's gone. And even then
Speaker 1: sometimes they come back. But so Zinga may turn things around,
Speaker 1: They might find the secret sauce needed to really get
Speaker 1: people invested in the company, both figuratively and literally. And uh,
Speaker 1: you know, maybe it will happen, but it could very
Speaker 1: well be that this might serve just as a warning
Speaker 1: to other people who want to launch their own companies.
Speaker 1: You can see some really uh great success early on
Speaker 1: if you're doing you know, if you're hitting all the
Speaker 1: right beats. But sometimes that that's short term success and
Speaker 1: it will come at the cost of a long term success. Yes. Um,
Speaker 1: well we'll wrap that up here. If you have guys,
Speaker 1: have any suggestions for future episodes of tech Stuff, why
Speaker 1: don't you send us a little note. You can do
Speaker 1: that via email. Are address as tech stuff at Discovery
Speaker 1: dot com, or send us a message on Facebook our Twitter.
Speaker 1: You can find us there with the handle text stuff
Speaker 1: hs W and Chris and I will talk to you
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Speaker 1: other topics, is it how stuff works dot com