Zynga posts record-breaking earnings for Q1 2019

Sam Desatoff, Thursday, May 2nd, 2019 8:07 pm

With its big “turnaround” complete, mobile gaming powerhouse Zynga has broken its own records yet again. The Words with Friends and CSR Racing developer has released its quarterly earnings report for Q1 2019, which boasts the company’s best-ever mobile revenue and bookings for a three-month period.

“Our turnaround is complete, and now we’re super focused on growing Zynga through live services, building and buying new forever franchises, and then investing in emerging platforms, technologies, and markets,” Zynga president of publishing Bernard Kim told GameDaily. “These are the three major pillars that we’re going after with regards to growing the company. And we really believe that Zynga’s position is incredibly strong in those areas.”

Concluding with the acquisition of Small Giant, Zynga’s turnaround represents a restructuring of company priorities. The strategy seems to be paying off, too, considering the quarter Zynga had. The earnings report flaunts a $265 million revenue, which is a 27 percent increase over last year, and $359 million in bookings, a 64 percent increase.

The stock market is taking notice of Zynga’s record-setting quarter as well. According to Seeking Alpha, the company’s stock rose almost 14 percent following the release of the earnings report. As a result of the stellar earnings, Zynga has adjusted its projected revenue for the year to $1.2 billion, a $50 million increase over its previous guidance, putting the company on track to deliver its strongest annual revenue since 2012.

Zynga’s most profitable sector is its stable of what Kim dubs “forever franchises,” games with a large player base that the company will continue to support for the foreseeable future. Kim referenced Words With Friends, CSR Racing, and Zynga Poker as examples. With the acquisition of Small Giant and Gram Games, Kim said Zynga has some new titles to add to the lineup.

“Our newest forever franchises are Merge Dragons and Empires & Puzzles,” he said. “These are businesses that we continue to grow through a really strong cadence of big bold beats within those titles that are delivered to blow away player expectations.”

When deciding on what games to bestow the “forever franchise” moniker, Kim said that there are a couple conditions to consider. “We look at two major metrics. [First], will players engage in the titles for a long time, and when we think of long time we think ‘will players be playing this game for ten years?’” he said. “Then on the metrics side we actually looks at a tight financial metric. Is this title going to exceed $100 million of revenue a year?”

Kim admits that ten years and $100 million a year is a bold and ambitious measuring stick, but it’s more realistic than you might think. Words With Friends recently celebrated its ten-year anniversary, and Zynga Poker is now in its 12th year.

“When you think about a title, is [it] a franchise? Is this an experience that I can enjoy for ten years of my life? So we really want our times to think long, but we also want them to think big with regards to revenue and engagement metrics,” Kim explained.

Looking forward, Zynga is optimistic about its ability to maintain its current momentum. There are a few games themed around licensed properties like Harry Potter and Game of Thrones on the horizon that Kim feels will do well for the company, despite the weight that comes with such an undertaking.

“When it comes to licensing intellectual property…there’s risk associated,” he explained. “We want to make sure that we’re targeting the IP and the experiences and the franchises in the marketplace that we think of as ‘forever’ as well. That actually helps narrow the focus to a handful of franchises that could last decades. [Franchises] like Game of Thrones, or Star Wars, or Harry Potter–I know my kids are still going to be engaging with those intellectual properties when they’re adults. So that’s something that’s a really great focus for the company…[and] it fits very nicely into our narrative around ‘forever franchises.’”

Beyond that, though, Kim said that Zynga is eyeing a number of new strategies across a range of technologies and genres for the future. Things like 5G platforms, subscription services, and third person shooter games are all prominent on the Zynga radar.

“5G is obviously going to help on the bandwidth side and maybe make both casual games, as well as core games, more accessible to players quickly. That’s something that we absolutely love,” he said. “Something like Stadia is something where players can skip the whole entire idea around buying a big, expensive piece of hardware.That’s what really excites us about our third pillar, which is investing in emerging platforms, technologies, but also building models as well.”

In the end, though, Zynga’s longevity comes down to its ability to get consumers playing its games for an extended period of time.

“Our goal is as a company, [is that] we remain ubiquitous across platforms. We just want to be where players are,” Kim said. “We actually want to create gameplay experiences for all different types of games.”

Sam, the Editor-in-Chief of GameDaily.biz, is a former freelance game reporter. He's been seen at IGN, PCGamesN, PCGamer, Unwinnable, and many more. When not writing about games, he is most likely taking care of his two dogs or pretending to know a lot about artisan coffee. Get in touch with Sam by emailing him at sdesatoff@rektglobal.com or follow him on Twitter.

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