Zynga Actually Posts Q4 Profit
posted Saturday Feb 9, 2013 by Scott Ertz
It has been several quarters and many bad decisions since the last time Zynga, the spammers of Facebook, posted a profit. This week, the company bucked that trend, posting 1 cent per share. Compared to the expected 3 cent per share LOSS, that is an impressive performance.
So, how did they pull it off? It would appear to be entirely the work of David Ko, Chief Operating Officer for Zynga. He stepped up and made the hard decisions, like cutting properties that have a fairly large fan base, but were still costing more than they were making. For example, CityVille 2 has seen its end, along with The Friend Game and Party Place.
While the second and third titles haven't been entirely successful, CityVille 2 has been popular. Ko described the process as "putting up guard rails" to allow managers to end a game that is proving to be popular but not profitable before they become a financial sinkhole. The plan moving forward is to focus on new franchises, creating mobile properties and making money.
While making money sure seems like an obvious goal for a company, it hasn't been that obvious to Zynga as of late. The goal is going to be more difficult to achieve with all of the competition in the marketplace. SimCity Social and The Sims Social from EA, plus the entry of Facebook itself into the market will make it more difficult to succeed. Plus, as Zynga has already made a name for itself in stealing ideas, it will be a challenge to get new franchises off the ground.
