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ZYNGA: ROOM ROOM FOR A FINAL ROUND OR IS THE GAME OVER? MBA688: Business Strte!" n# St$e%&'#er Res(&nsi)i'it" Dr* A'n Eisner
Alan Yu, Ainur Baigamyt, Ayush Agrawal, Brijen Amin, frances
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Table of Contents 1.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Introduction .
2.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Statement and description of central issue .
2.1
3.
#.
Zynga’s corporate culture and major issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Identification/description of alternaties .
3.1
!roduct Innoation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2
!rocess Innoation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3
"utside Influence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.#
Collaboration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 $ationale for selecting t%e best alternaties .
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!roduct innoation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
#.2
"utside influence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
&.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 'escription of implementation plan .
(.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Conclusion.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 $eferences.
Page 3 1. Introduction Zynga Inc. is a leading ro!ider of social game ser!ices. "heir #usiness is to de!elo, mar$et and oerate social games as li!e ser!ices layed on mo#ile latforms such as i%& and Android and social networ$ing sites such as 'ace#oo$. (enerally, all of Zynga)s games are free to lay, and the comany generates re!enue through the in*game sale of !irtual goods and ad!ertising ser!ices. +Annual eort 2-1/ 2. &tatement and descrition of central issue 'rom #eing a dominant social game de!eloer and its artnershi with 'ace#oo$ to falling in game ran$ings far #ehind and facing lawsuits, from record seed growth to dramatic fall of stoc$ and re!enues * Zynga had a lot going on for a comany with a short eriod of oerating since it was founded in 2--0. 'rom the #eginning, Zynga)s success of social games was dri!en #y growth of social networ$s and alications. "he comany artnered with 'ace#oo$ for launching highly oular 'arm!ille, ityille or astleille. Zynga)s strategy was focused on social networ$ latforms and generating re!enues #y selling !irtual goods and ad!ertising. owe!er, Zynga was too deendent on 'ace#oo$ and was slow to catch u with numerous de!eloers on mo#ile oerating systems. Being slow at inno!ati!e chamion roducts, Zynga tried to generate rofits #y all means and with only 4data*dri!en5 aroach. According to usli +2-11/, Zynga had a 4tough culture5 where emloyees were ressured #y stressful deadlines and long hours. 4It)s !ery similar to a 6ew Yor$ in!estment #an$. 7 It)s data*dri!en, and it)s intense.5 "he comany e8erienced lac$ of #usiness focus and inno!ation. "he users were also not hay with Zynga)s ser!ice * lag time, sam*li$e messages, ressure to #uy resources for games and ri!acy issues. 9ithout launching new games and #eing a follower of other game de!eloers, not
Page only Zynga faced lawsuits from angry ri!als #ut the user #ase started to shrin$ dramatically. :ecline of mar$et share and caitali;ation made it harder for the comany to return its growth and early success. Zynga has to focus on inno!ati!e aroach to enhance games, on users) needs and on imro!ement of cororate culture and go!ernance. 2.1
Zynga)s cororate culture and major issues 'or a long time, Zynga is $nown for ha!ing a highly cometiti!e and stressful culture, with
long wor$ing hours. According to a former emloyee of the comany, the <% e!en encouraged them to coy cometitors) software. As a result, Zynga faced many lawsuits. And some senior emloyees were =uite dissatisfied with the way that Pincus runs the #usiness. Besides, the emloyees were also uset on the decision*ma$ing rocess within the comany. "he <% is dictatorial, as he turned down inno!ati!e ideas from the designers just #ecause he thought that a new idea did not fit the 4tried*and*true5 mold of other success. "he founder created the wrong cororate culture, the whole comany was acting in a wrong way, and the endless lawsuits definitely damaged the firm)s reutation. Zynga>s #ad reutation has re!ented it from ac=uiring some to talent. According to reort, Po a was urchased #y
s core issues, there are a few alternati!es or recommendation that can #e imlemented. "his includesC roduct inno!ation, rocess inno!ation, outside influence, and colla#oration with inno!ati!e artners.
Page @ 3.1 Product Inno!ation %ne of Zynga>s greatest wea$ness is the a#ility to inno!ate, howe!er they chose to #e the DcoycatD in the social gaming industry. Eac$ of originality doesn>t gi!e Zynga the flare they need to win mar$et share. "he lac$ of consumer satisfaction recently has haunt them as more comlaints are recurring from Zynga games. "o challenge the issues, roduct inno!ation needs to #e imlemented to enhance the e8erience for their consumers. Zynga does not want to ta$e away the leasure asect from their consumers. 'actors such as game delays and Zynga suort are imortant considerations. Zynga>s model is to coy other success roducts in the mar$et, #ut it is an ineffecti!e way to roduct a #etter e8erience. Imro!ing an original roduct will create a greater stir in the social gaming mar$et. :oing it #etter than your cometition is a first ste forwards. 9hether it is creating a lag free e8erience or imro!e Zynga suort on their a, onsite, email, or hone. 3.2 Process Inno!ation Another alternati!e is to ha!e rocess inno!ation. "his alternati!e can #e imlement #y fostering a Droduct chamionD within the comany. A roduct chamion is $ey #ecause they are necessary to sell ideas to the management and to get management engaged on a roject. "hey are necessary to romote inno!ation within a comany. Product chamions ro!ide technical cometence, $nowledge a#out the comany, $nowledge of the mar$et, and aggressi!eness. A roduct chamion has a realistic idea of a roduct>s otential the mar$et and has clear understanding of the comany>s needs. "hey can determine if an idea is rele!ant or not. Pro* acti!eness and cometiti!e aggressi!eness are way Zynga can imro!e their osition. A roduct chamion fulfils this role to hel Zynga #ecome more inno!ati!e. "hese =ualities in a erson is what Zynga may need to consider in their rocess to mo!e forward.
Page F 3.3 %utside Influence 6e8t ossi#ility is to ha!e outside influence. Zynga needs a new ersecti!e and culture change. iring new high le!el e8ecuti!es from other successful comanies such as from t a #reath of fresh air. %utside influence from different minds will #ring inno!ation and de!eloment for Zynga. Zynga may also reach out to in!estors such as !enture caitalist and angel in!estors for increase caital to fund major game changing rojects. Inno!ating ta$es a lot of resources and ha!ing financial suort from the outside hels sta#ili;e and alle!iate stress from their oerations. 3. olla#oration Eastly, Zynga can form colla#oration with inno!ati!e artners. Zynga needs someone that $nows the details of the mar$et, one that can comlement their own #usiness. Inno!ation is the dri!er of growth. By ha!ing a artnershi, comanies are a#le to inno!ate much more =uic$ly and e!en create solutions to ro#lems their ro#lems. olla#oration hels #uild on di!erse culture and organi;ational strength. "his sets u more cross*functional teams to ma$e the most of their caa#ilities. Zynga may colla#orate with a team that leads in de!eloing inno!ati!e idea that Zynga may not #e a#le to de!elo themsel!es. 'rom another ersecti!e, Zynga ro!ides access to a large consumer #ase and ha!e a latform to deli!ery their roducts to the mar$et. . ationale for selecting the #est alternati!es All of the alternati!es suggested in the re!ious section are imortant for Zynga to carry out. owe!er, they need to rioriti;e on which action to imlement first.
Page 0 .1 Product inno!ation Zynga is $nown to coy games of other comanies and this has cost them a lot in litigations. "hey should focus on inno!ating new tyesgenre of games #y hea!ily in!esting in research and de!eloment. Gsers are comlaining a#out the o#stacles that limit their gaming e8erience. It is imortant for Zynga to ta$e the feed#ac$ from its users and incororate it into the games. It is imossi#le to ma$e e!ery customer hay, #ut it is imortant to hear the masses. "hey need to immediately imro!e their customer suort system. A gamer should #e a#le to contact the customer care from inside the a, email, hone or !ia Zynga)s we#site. .2 %utside influence "he case tal$s a#out how emloyees are discouraged from inno!ating and just coy their cometitors. "his tye of thin$ing of the to management will e!entually tric$le down to the entire wor$force.
Page could #e ta$en to imlement these ideas and ut them into effect. "he milestone aroach will hel the comany $ee a trac$ of what was imlemented. After a mar$ of a certain eriod, the comany should e!aluate if they were successfully a#le to imlement these changes and if their goal was achie!ed. If not, then Zynga should start loo$ing at merging with a #igger fish li$e
Page other #ig comanies. &o we suggest that Zynga should ac=uire other small firms or indeendent de!eloers, to $ee u with the latest technology. Also Zynga can consider merge with other firms to gain much more resources than #efore. Besides targeting on the high*tech comanies, Zynga may also need to thin$ a#out the firms that can offer latforms for the game layers, li$e 'ace#oo$. %r some mo#ile latforms, as many young are hea!ily relying on the hone to lay games. F. onclusion 'rom the a#o!e analysis, we can draw a conclusion that Zynga is wea$ in e8ecuting strategic control. Zynga had #een a dominant layer in social gaming field, the comany had #een 4doing the right thing.5 "hey formulated strategy well to reach to the to and therefore #e a#le to generate imressi!e re!enuesJ at the same time, its choice of strategies and goals still 4fit within the conte8t of current strategic en!ironment. owe!er, on the other hand, Zynga is struggling with its cororate go!ernance and #eha!ioral control, which is to 4do the things right.5 "he comany)s wea$nesses are seen in its wea$ organi;ational culture, rewards and #oundaries #ecause of many aforementioned ethical issues. Zynga)s greatest cometiti!e ad!antages include its massi!e user #ase and its analytics and game latform. "herefore, in order to attain and sustain a cometiti!e ad!antage, the comany)s leadershi need to ta$e immediate actions. 'irst, it)s ad!isa#le for the comany to focus on ma$ing games that are not directly 4insired5 from its cometitors to re!ent from #eing accused of cloning in the future. &econd, Zynga should refocus on its customer ser!ice #ecause without the suort of customers, Zynga)s growth will #e declined tremendously. In addition, Zynga should also change its #eha!ioral control strategies in order to gain trust from its
Page 1!orter’s )ie )orces and Zynga’s business
ometiti!e i!alry 9ithin "he Industry
ery igh 'ast e!ol!ing technologies, "he cometition increases mo#ile latforms, raid with growth of mo#ile industry growth. Intense oerating system latforms cometition on user #ase, and as. Zynga was slow to #rand recognition, channels shift to mo#ile users of distri#ution, =uality of games and retaining users Bargaining Power %f igh Kany entertainment otions In 2-13 monthly users dro #y ustomers and games 13L, #etween 2-12*2-1 daily users droed from 3 mln to 21 mln +:a!isdon 2-1@/ Kost games are free, customers ha!e high #argaining ower "hreat %f 6ew
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eferences :ess, (., Eum$in, (., s aid :ecline. Bloomberg BusinessWeek. etrie!ed from httCwww.#loom#erg.comnewsarticles2-13*-F*-a*short* history*of*;yngas*raid*decline :a!idson, Q. +2-1@, August 11/. Zynga)s games losing users fast, on ace to lose ?1@- million in 2-1@. TechnoBuffalo. etrie!ed from httCwww.techno#uffalo.com2-1@-11;yngas*games* losing*users*fast*on*ace*to*lose*1@-*million*in*2-1@ alan, ., Eitoff, E., 9right, :. +2-1-, 6o!em#er 10 ). Inside ZyngaC 6ow the reators of >ityille.> ABC News. etrie!ed from httCa#cnews.go.com6ightlineinside*;ynga* creatorsfarm!illestoryNidO121F0F0 KacKillan, :. +2-1-, Aril 22/. Zynga and 'ace#oo$. It>s omlicated. Business Week . etrie!ed from httCwww.#usinesswee$.commaga;inecontent1-R1#10F-03@@.htm usli, <. K. +2-11, 6o!em#er 20/. Zynga)s "ough ulture is$s a "alent :rain. ealBook . etrie!ed from httCdeal#oo$.nytimes.com2-111120;yngas*tough*culture*ris$s*a*talent* drain "refis "eam +2-1@, Karch 3/. Zynga "hrough "he Eens %f Porter>s 'i!e 'orces. !orbes. etrie!ed from httCwww.for#es.comsitesgreatseculations2-1@-3-3;ynga*through*the* lens*of*orters*fi!e*forcesS211cfdc22a
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