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ZYNGA: ROOM FOR A FINAL ROUND OR

IS THE GAME OVER?
MBA688: Business Strategy and Stakeholder Responsibility
Dr. Alan Eisner

Alan Yu, Ainur Baigamyt, Ayush Agrawal, Brijen Amin, frances

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Table of Contents
1.

Introduction................................................................................................................3

2.

Statement and description of central issue..................................................................3

2.1

3.

4.

Zyngas corporate culture and major issues......................................................................4

Identification/description of alternatives.....................................................................4
3.1

Product Innovation.......................................................................................................... 5

3.2

Process Innovation...........................................................................................................5

3.3

Outside Influence.............................................................................................................6

3.4

Collaboration................................................................................................................... 6

Rationale for selecting the best alternatives.................................................................6

4.1

Product innovation...........................................................................................................7

4.2

Outside influence............................................................................................................. 7

5.

Description of implementation plan............................................................................8

6.

Conclusion..................................................................................................................9

References........................................................................................................................11

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1. Introduction
Zynga Inc. is a leading provider of social game services. Their business is to develop,
market and operate social games as live services played on mobile platforms such as iOS and
Android and social networking sites such as Facebook. Generally, all of Zyngas games are free
to play, and the company generates revenue through the in-game sale of virtual goods and
advertising services. (Annual Report 2014)
2. Statement and description of central issue
From being a dominant social game developer and its partnership with Facebook to
falling in game rankings far behind and facing lawsuits, from record speed growth to dramatic
fall of stock and revenues - Zynga had a lot going on for a company with a short period of
operating since it was founded in 2007. From the beginning, Zyngas success of social games
was driven by growth of social networks and applications. The company partnered with
Facebook for launching highly popular Farmville, CityVille or CastleVille. Zyngas strategy was
focused on social network platforms and generating revenues by selling virtual goods and
advertising. However, Zynga was too dependent on Facebook and was slow to catch up with
numerous developers on mobile operating systems. Being slow at innovative champion products,
Zynga tried to generate profits by all means and with only data-driven approach. According to
Rusli (2011), Zynga had a tough culture where employees were pressured by stressful
deadlines and long hours. Its very similar to a New York investment bank. Its data-driven,
and its intense.
The company experienced lack of business focus and innovation. The users were also not happy
with Zyngas service - lag time, spam-like messages, pressure to buy resources for games and
privacy issues. Without launching new games and being a follower of other game developers, not

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only Zynga faced lawsuits from angry rivals but the user base started to shrink dramatically.
Decline of market share and capitalization made it harder for the company to return its growth
and early success. Zynga has to focus on innovative approach to enhance games, on users needs
and on improvement of corporate culture and governance.
2.1

Zyngas corporate culture and major issues

For a long time, Zynga is known for having a highly competitive and stressful culture, with

long working hours. According to a former employee of the company, the CEO even encouraged
them to copy competitors software. As a result, Zynga faced many lawsuits. And some senior
employees were quite dissatisfied with the way that Pincus runs the business. Besides, the
employees were also upset on the decision-making process within the company. The CEO is
dictatorial, as he turned down innovative ideas from the designers just because he thought that a
new idea did not fit the tried-and-true mold of other success. The founder created the wrong
corporate culture, the whole company was acting in a wrong way, and the endless lawsuits
definitely damaged the firms reputation. Zynga's bad reputation has prevented it from acquiring
some top talent. According to report, Pop Cap was purchased by EA at $750 million plus stock,
even though Zynga had offered a higher price at $950 million. Concerning about the different
way of running business, Pop Cap rejected the higher offer of Zyngas. And Angry
Birds developer Rovio also walked away from a $2.25 billion offer from Zynga as a result of its
negative reputation.
3. Identification/description of alternatives
To mend Zynga's core issues, there are a few alternatives or recommendation that can be
implemented. This includes: product innovation, process innovation, outside influence, and
collaboration with innovative partners.

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3.1 Product Innovation
One of Zynga's greatest weakness is the ability to innovate, however they chose to be the
"copycat" in the social gaming industry. Lack of originality doesn't give Zynga the flare they
need to win market share. The lack of consumer satisfaction recently has haunt them as more
complaints are recurring from Zynga games. To challenge the issues, product innovation needs to
be implemented to enhance the experience for their consumers. Zynga does not want to take
away the pleasure aspect from their consumers. Factors such as game delays and Zynga support
are important considerations. Zynga's model is to copy other success products in the market, but
it is an ineffective way to product a better experience. Improving an original product will create a
greater stir in the social gaming market. Doing it better than your competition is a first step
forwards. Whether it is creating a lag free experience or improve Zynga support on their app,
onsite, email, or phone.
3.2 Process Innovation
Another alternative is to have process innovation. This alternative can be implement by
fostering a "product champion" within the company. A product champion is key because they are
necessary to sell ideas to the management and to get management engaged on a project. They
are necessary to promote innovation within a company. Product champions provide technical
competence, knowledge about the company, knowledge of the market, and aggressiveness. A
product champion has a realistic idea of a product's potential the market and has clear
understanding of the company's needs. They can determine if an idea is relevant or not. Proactiveness and competitive aggressiveness are way Zynga can improve their position. A product
champion fulfils this role to help Zynga become more innovative. These qualities in a person is
what Zynga may need to consider in their process to move forward.

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3.3 Outside Influence
Next possibility is to have outside influence. Zynga needs a new perspective and culture
change. Hiring new high level executives from other successful companies such as from
Electronic Arts will bring new perspective from outside. Zynga has been stuck in a cycle of
stubborn culture and policy that doesn't a breath of fresh air. Outside influence from different
minds will bring innovation and development for Zynga. Zynga may also reach out to investors
such as venture capitalist and angel investors for increase capital to fund major game changing
projects. Innovating takes a lot of resources and having financial support from the outside helps
stabilize and alleviate stress from their operations.
3.4 Collaboration
Lastly, Zynga can form collaboration with innovative partners. Zynga needs someone that
knows the details of the market, one that can complement their own business. Innovation is the
driver of growth. By having a partnership, companies are able to innovate much more quickly
and even create solutions to problems their problems. Collaboration helps build on diverse
culture and organizational strength. This sets up more cross-functional teams to make the most of
their capabilities. Zynga may collaborate with a team that leads in developing innovative idea
that Zynga may not be able to develop themselves. From another perspective, Zynga provides
access to a large consumer base and have a platform to delivery their products to the market.
4. Rationale for selecting the best alternatives
All of the alternatives suggested in the previous section are important for Zynga to carry out.
However, they need to prioritize on which action to implement first.

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4.1 Product innovation
Zynga is known to copy games of other companies and this has cost them a lot in
litigations. They should focus on innovating new types/genre of games by heavily investing in
research and development. Users are complaining about the obstacles that limit their gaming
experience. It is important for Zynga to take the feedback from its users and incorporate it into
the games. It is impossible to make every customer happy, but it is important to hear the masses.
They need to immediately improve their customer support system. A gamer should be able to
contact the customer care from inside the app, email, phone or via Zyngas website.
4.2 Outside influence
The case talks about how employees are discouraged from innovating and just copy their
competitors. This type of thinking of the top management will eventually trickle down to the
entire workforce. Employees wont be motivated and the retention rate is bound to go down. To
tackle this the top management needs to be changed. New industry experts should be hired. This
will help bring in fresh ideas, a new mindset and will help in changing the non-innovative culture
of the office. In a world where the gaming industry is saturated and the companies themselves
are playing hunger games with each other, it is imperative to be different than the rivals.
The company should also look at raising immediate funds from investors. This will help
in clearing out the current losses. It will also provide a tight leash on the top management to
achieve results. In some cases, investors get involved in overlooking the operations of the
company. This would certainly help Zynga get external influence.
Overall the above two alternatives can be implemented at an incremental pace. Clear
goals could be defined and tracking system could be installed in place. A period of 612 months

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could be taken to implement these ideas and put them into effect. The milestone approach will
help the company keep a track of what was implemented.
After a mark of a certain period, the company should evaluate if they were successfully
able to implement these changes and if their goal was achieved. If not, then Zynga should start
looking at merging with a bigger fish like Electronic Arts. The advantage of getting acquired or
merging with them is that they dont have a strong presence in the Facebook gaming world. But
Zynga does and they complement Electronic Arts very well.
5. Description of implementation plan
Based on the discussion of Zyngas issues, our team organizes some plans to help the company to
complete the organization restructure.
First, in the short term, Zynga may need to focus on the innovation. On one hand, new
technology in the game can help Zynga occupy the market, on the other hand, it can help the
company avoid spending money on the endless lawsuits. The company can hire some talented
people from outside and start a team that will concentrate on the product innovation. The firm
can also consider introducing Project Champions which can come from the Executive team to
help remove barriers and advocate for research team needs that would have had a longer lead
time for help and resources had a Project Champion not have been involved. And Zynga also
needs to consider minimize the game development time. As the technology develops so fast, it is
much easier to seize the market in the first round.
In the long term, we advise Zynga to consider collaborate with other firms. In recent years,
Zynga indeed make remarkable success, but it is hard to sustain the development and keep
growing. As Zynga is relatively a small firm, it is hard for it to compete on the resources with

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other big companies. So we suggest that Zynga should acquire other small firms or independent
developers, to keep up with the latest technology. Also Zynga can consider merge with other
firms to gain much more resources than before. Besides targeting on the high-tech companies,
Zynga may also need to think about the firms that can offer platforms for the game players, like
Facebook. Or some mobile platforms, as many young are heavily relying on the phone to play
games.
6. Conclusion
From the above analysis, we can draw a conclusion that Zynga is weak in executing strategic
control. Zynga had been a dominant player in social gaming field, the company had been doing
the right thing. They formulated strategy well to reach to the top and therefore be able to
generate impressive revenues; at the same time, its choice of strategies and goals still fit within
the context of current strategic environment. However, on the other hand, Zynga is struggling
with its corporate governance and behavioral control, which is to do the things right. The
companys weaknesses are seen in its weak organizational culture, rewards and boundaries
because of many aforementioned ethical issues.
Zyngas greatest competitive advantages include its massive user base and its analytics
and game platform. Therefore, in order to attain and sustain a competitive advantage, the
companys leadership need to take immediate actions. First, its advisable for the company to
focus on making games that are not directly inspired from its competitors to prevent from
being accused of cloning in the future. Second, Zynga should refocus on its customer service
because without the support of customers, Zyngas growth will be declined tremendously. In
addition, Zynga should also change its behavioral control strategies in order to gain trust from its

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Porters Five Forces and Zyngas business

Competitive Rivalry
Within The Industry

Bargaining Power Of
Customers

Very High Fast evolving technologies,

mobile platforms, rapid
industry growth. Intense
competition on user base,
brand recognition, channels
of distribution, quality of
games and retaining users
High Many entertainment options
and games

Threat Of New Entrants Very High Low barriers to entry

gaming industry, but new
entrants need network
efforts and distribution
channels
Bargaining Power Of
High Dependence on social
Suppliers
network platforms and
mobile platforms

Threat Of Substitute
Products

High

Growth of mobile games

and entertainment apps
affect how much time and
money users spend on
games

The competition increases

with growth of mobile
operating system platforms
and apps. Zynga was slow to
shift to mobile users

In 2013 monthly users drop by

13%, between 2012-2014 daily
users dropped from 39 mln to
21 mln (Davisdon 2015)
Most games are free,
customers have high
bargaining power
Potential to high returns,
attractiveness to growth and
profits

Facebook, Apple and Google

can affect Zyngas business,
change terms or policies (51%
and 44% of revenues from
using Facebook and mobile
platforms)
Variety of entertainment
options, growing mobile
gaming industry

shareholders and stakeholders and strengthen the company. To strengthen the company Zynga
may merge with other better firms to gain competitive edge.

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References
Dess, G., Lumpkin, G., Eisner, A., & McNamara, G. (2014). Strategic management: text &
cases (7th ed., pp. C123-C127). New York City, NY: McGraw Hill.
Zynga - Annual Report. (2015, February 24). Retrieved April 22, 2015, from
http://investor.zynga.com/secfiling.cfm?filingID=1193125-15-60187&CIK=1439404
Bachman J., Brustein J. (2013, June 4). A Short History of Zynga's Rapid Decline. Bloomberg
BusinessWeek. Retrieved from http://www.bloomberg.com/news/articles/2013-06-04/a-shorthistory-of-zyngas-rapid-decline
Davidson, J. (2015, August 11). Zyngas games losing users fast, on pace to lose $150 million in
2015. TechnoBuffalo. Retrieved from http://www.technobuffalo.com/2015/08/11/zyngas-gameslosing-users-fast-on-pace-to-lose-150-million-in-2015/
Kaplan, K., Litoff, L., Wright, D. (2010, November 17). Inside Zynga: Now the Creators of
'CityVille.' ABC News. Retrieved from http://abcnews.go.com/Nightline/inside-zyngacreatorsfarmville/story?id=12169767
MacMillan, D. (2010, April 22). Zynga and Facebook. It's Complicated. Business Week.
Retrieved from http://www.businessweek.com/magazine/content/10_18/b4176047938855.htm
Rusli, E. M. (2011, November 27). Zyngas Tough Culture Risks a Talent Drain. DealBook.
Retrieved from http://dealbook.nytimes.com/2011/11/27/zyngas-tough-culture-risks-a-talentdrain/
Trefis Team (2015, March 3). Zynga Through The Lens Of Porter's Five Forces. Forbes.
Retrieved from http://www.forbes.com/sites/greatspeculations/2015/03/03/zynga-through-thelens-of-porters-five-forces/#211c9fdc242a

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