Zynga: an America's Hottest Brands Case Study

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When Mark Pincus looked around the internet in early 2007, he noticed something was largely missing: fun.

"It was all utility," he recalled. "It was Amazon, eBay, Craigslist, even Facebook was a social utility." It was also about the time that Facebook opened up its platform to outside developers,and that led Mr. Pincus to build his social-gaming company, Zynga.

Its popular games -- "Mafia Wars," "Texas Hold 'Em," "Farmville" and "YoVille" -- have helped the company quietly become a big player in the expanding social-media space, with a daily user base of 50 million, per developeranalytics.com, and one of the early examples of a real, major revenue driver in a space still struggling to prove it can be a big business. (Annual revenue estimates vary between $100 million and $250 million by industry watchers, and we may soon find out the real number if the company goes public as some are suggesting.) It's worth watching for its virtual economy, driven by users purchasing points and virtual goods for games. The other half of the business is generated by ads and partner offers; players can fill out a survey or buy services from Zynga partners for more points.

Zynga came under fire for several less-than-reputable offers showing up in its games. Techcrunch surfaced video from last spring of Mr. Pincus recounting Zynga's early quest for financial independence to a crowd of developers. "I did every horrible thing in the book just to get revenues," he said -- and the CEO spent early November backpedaling in an effort to save Zynga's reputation. In the end, he decided to remove offers from Zynga.

Mark Pincus
Mark Pincus, founder, Zynga
"My mission is to build Zynga into a sustainable consumer service with enduring value to our users," he said in a blog post. "We will continue to do whatever it takes to earn our users' trust and respect for the long-term."

For Zynga, user experience and trust is everything, as its players are its best marketers: The game play taps into the network effect of social media: People invite their Facebook and MySpace friends to play games, and, in turn, invite more in.

Its next move? "Smartphones," Mr. Pincus said. "They're the next frontier in social gaming."

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