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STRATEGIC AUDIT OF ZYNGA INC.
AGENDA
• Company overview.
• Strategic Posture.
• External Environment.
• Internal Environment.
• Analysis of strategic factors.
• Strategic Alternatives and Recommended Strategy.
• Strategy Implementation.
• Strategy evaluation and control.
• References.
COMPANY OVERVIEW
Zynga
4
• Founded in 2007 by Mark Pincus
• Based in San Francisco, CA
• Pioneer and innovator of social games and a leader in making “play” as a core
activity on the Internet
• Owner of several top social media games for mobile/tablets systems such as:
Farmville, Zynga Poker, Mafia Wars, Words with Friends
• Generally, all games are free to play and revenue is generated through the in-game
sale of virtual goods, mobile game download fees, and advertising services
COMPANY OVERVIEW
TIMELINE
STRATEGIC POSTURE
Zynga
MISSION STATEMENT
“Connecting the world through games”
• Although the mission statement is easy to read and understand, it is poor and
need more work to be done.
• It only defines business domain without mentioning why it is attractive
• It doesn’t mention anything about interests of the stakeholders or company’s
responsibility towards them.
• It doesn’t talk about competitive advantage, culture, values and beliefs
• It doesn’t give any direction to managers and employees to behave and take
decisions correctly.
OBJECTIVES
• Profitability
• Turning last years losses to profits
• Viability
• Moving to console and mobile gaming instead of Facebook; on which it depends
for the previous period.
STRATEGIES
• Corporate Growth Strategy
• Product Development : Providing the existing markets with new games
operating on mobiles and game console to catch the rapid growth in smart
phones gaming market and people shift to play on mobile devices instead of
PCs
• Acquisition of companies experienced in mobile games
• Investing in its owned infrastructure (zCloud) to reduce reliance on third-party
web hosting services (Vertical integration)
• Investing resources in integrating and operating some games on additional
platforms including Google+, mixi, and Tencent.
• Functional Strategy – HR
• Hiring, developing, motivate, and retain talented employees
• Unique employees benefits, Unique vacation policy.
POLICIES
• Privacy Policy
• Tells how the company collect, store, use and disclose personal information
when providing these services to customers.
• Unique HR policies
• Specially in vacations
• CSR Policy
• Company made great efforts in earthquakes disasters in both Tahiti and Japan
in which Zynga and its game players have demonstrated a leadership position
that should serve as an inspiration to other brands.
CORPORATE GOVERNANCE
Zynga
COMMON STOCK STRUCTURE
• Three-class common stock structure publicly traded
• Class C – 70 votes per share
• Class B – 7 votes per share
• Class A – 1 vote per share
• Only the founder, chairman & CEO; Mark Pincus; is holder of class C common
shares.
BOARD OF DIRECTORS
• Only One internal and seven external members
• Mark Pincus L. John Doerr
• Regina E. Dugan Frank Gibeau
• William Gordon Louis J. Lavigne
• Sunil Paul Ellen F. Siminoff
• No cash compensation had been granted to non-employee directors for their
services.
• Instead they granted to purchase shares under company’s equity incentive plans
TOP MANAGEMENT
• Mark Pincus- Founder, chairman & CEO
• Company growth is heavily dependent on efforts to employee talents
• High demand of game designers, product managers, engineers and executives
• Devote resources to indentifying, recruiting, hiring, training, successfully integrating
and retaining employees
• Maintains team spirit in employees and applies effective human resource strategies
to encourage and motivate employees to perform their best
• There is a spirit of competition within Zynga’s structure. Each unit operates
separately to produce new games/products/ideas
CURRENT PERFORMANCE
Zynga
FINANCIAL OUTLOOK
• Revenues are declining YOY since
2013.
• Intensive investment in R&D.
• Costs are exceeding revenue
generated
• Uncontrolled G&A expenses is growing
despite the revenue decline.
REVENUE STREAMS
• Total revenues are declined in both
online game and advertising revenue
mainly due to decline in existing games
and the lack of successful new
launches.
• Increase the focus over the revenue
diversification as well as the continues
investment on R&D to develop new
games to secure the revenue growth.
• 55% of the online revenues are
generated from three games only,
however the remaining 45%, no
other game generated more than
10% of online game revenues
during 2014.
INITIATIVES TO IMPROVE PERFORMANCE
Set of initiatives were concluded to reduce the cost and improve the financial performance:
• Consolidation of third party data center facilities and increasing usage of Zynga’s own datacenters
reduced the depreciation costs as well as lower cost driven from lower data usage.
• Reduced labor cost and related discretionary costs.
• Restructured the R&D as well as reallocated the facilities and overhead costs and decrease in
headcount related expenses.
• Increase in marketing expense due to higher mobile player acquisition costs and consumer
marketing costs attributed from the launch of new games.
• Reduced third party customer service.
SOCIAL GAMING MARKET
19
Active users share Top Facebook games
EXTERNAL ENVIRONMENT: OPPORTUNITIES
& THREATS
Zynga
EXTERNAL ANALYSIS - PESTEL ANALYSIS
• Political
This includes government regulations and legal issues, and defines both formal and informal rules
under which the firm must operate
• Stability
• Employment laws
• Economic
Economic factors affect the purchasing power of potential customers and the firm's cost of capital.
• Interest Rate Fluctuation Risk
The company is subject to market risk due to changes in prevailing interest rates that may
cause the principal amount of the investment to fluctuate.
• Exchange rates
Zynga is operating globally, which put its receivables and payables exposed to the fluctuation
risk of foreign exchange rates
• Inflation rate
Inflation doesn’t have a material effect on Zynga’s business, However if Zynga’s costs are to
become subject to significant inflationary pressures
EXTERNAL ANALYSIS - PESTEL ANALYSIS
• Social
These factors affect Zynga’s customers‘ needs and the size of potential markets. Some social
factors include:
• Size of demographic market segments
Zynga is operating globally; there are no demographic limits for expanding its
business operation.
• Population growth rate
The higher population growth rate the better opportunity to grow and increase
business volumes.
• The availability of a well-trained workforce:
Remains one of the challenges to sustain the company growth, well trained workforce
is one of the most important factors in the technological fields.
EXTERNAL ANALYSIS - PESTEL ANALYSIS
• Technological
Technological factors can lower barriers to entry, reduce minimum efficient production
levels.
• R&D activity
Continuous investment in R&D is a must to increase the products portfolio and to
increase the company market share.
• Rate of technological change
Due to the technological changes, the company has to cope all changes occurred in
order to be always attractive to its customers.
EXTERNAL ANALYSIS - PESTEL ANALYSIS
• Legal
• Government relations
Zynga is subject to number of foreign and domestic laws and regulations that
affect companies conducting business on the internet.
• Privacy issues
Zynga is subject to federal, state, and foreign laws regarding privacy and
protection of the players’ data.
EXTERNAL ANALYSIS - PORTER’S FIVE FORCES
Threat of New Entrants (Medium bargaining power)
• No much complicated barriers to entry.
• Higher penetration affected by the technology evolution and increasing the mobile and social
media penetration
• Attractive industry specially for the developers to create their own games however it needs a
real talent to be able to compete the existing market players
Bargaining Power of Suppliers (High)
High bargaining power of suppliers as creation of the games is depend on
• Talented developers
• Adobe flash player technology
• Restricted copyrights of the game content.
• Infrastructure (Data center)
Bargaining Power of buyers (High)
• Consumers have a very wide selection of games.
• Variety of free & demo games are easy of access
• Increased globalization also adds to the bargaining power of the consumer.
EXTERNAL ANALYSIS - PORTER’S FIVE FORCES
Threat of Substitute Products or Services (Medium)
One of the major threats of substitution is facing the innovation in other industries such as
media, movies and music as well as different amusing tools on the internet.
Intensity of Rivalry Among Competitors (High)
Competition is aggressive, a lot of established companies with famous games are
competing as well as different technologies with advanced equipment i.e. Xbox and
PlayStation.
Major competitors:
• DENA CO., LTD (Japan)
• Electronic Arts (EA) (U.S.)
• Gree Games (Japan)
• Gameloft (Europe)
Opportunities
Factors Weight Score
Weighted
Score
Comments
Global market 10% 5 0.5
Several acquisitions and launches
of new studios & offices
Population increase 15% 4 0.6
Number one in terms of active user
base (far from all competitors)
New gaming platforms (Mobiles,
consoles, tablets beside PCs)
20% 4 0.8
Varity of games applicable for
different platforms
New technologies (3D, interaction) 10% 2 0.2 Still trying (didn't reach maturity)
Increasing popularity of different
social networks (Facebook,
google+,…
5% 2 0.1
Still depending on a sole
partnership with Facebook
EXTERNAL FACTORS ANALYSIS SUMMARY (EFAS)
28
Threats
Factors Weight Score
Weighted
Score
Comments
Increasing the aggressiveness of
the competition/ new entrance
10% 2 0.2
No exclusivity deals with any of its
partners
Global legal and political
restrictions to access content
5% 4 0.2
Following legal instructions and
stick to privacy rules
Low skilled labor market 20% 2 0.4
Having challenges in acquiring
talents
Copyright, patent infringements –
counterfeit gaming
5% 1 0.05
Didn't develop any attractive
copyrighted characters or even gain
any privilege of using any famous
characters
Total 100% 3.05
Zynga rate is average In the
external assessment
EXTERNAL FACTORS ANALYSIS SUMMARY (EFAS)
INTERNAL ENVIRONMENT: STRENGTHS
AND WEAKNESSES
Zynga
• Matrix corporate structure is followed
• Functional and product forms are combined simultaneously at the same level
• Matrix structure matches current maturity organizational life cycle
• SBU’s managed independently and report directly to CEO
• Company structure provides decentralization of decision making
CORPORATE STRUCTURE
CORPORATE CULTURE
• Entrepreneurial, execution focused, fiercely competitive and stressful culture.
• Zynga’s headquarters, nicknamed “The Dog House, features a coffee shop, gaming
arcade, gym, basketball court, and wellness center.
• Zynga employees enjoy perks such as free gourmet meals, access to an in-house
nutritionist, personal training, and insurance coverage for pets
• Culture encouraged employees to work hard and play hard
• Very hard to keep and maintain culture as most of employees obtained through
acquisitions
• Varying reports from employees about company culture, some are very positive, and
others are extremely negative due to the stressful culture
• After only four years in existence, Zynga is already earning over a billion dollars a year
in revenue. No gaming company has grown so big in so little time before.
• Zynga has the largest gaming base of any other mobile software company .part of
zynga’s draw is the free to play revenue model that allow everyone to try out the game
with Zero level commitment.
• Zynga has strategic acquisition that are second to none in its segment . this is allows for
the best effects, graphics, sound and ease of play for the consumer who is already
aware and active on Zynga’s platform
• Competitors often have to spend as much as 50% of their budgets on marketing and
advertising, where Zynga is already flush with popularity and exposure.
CORPORATE RESOURCES - MARKETING
Zynga has 7 basic strategies in marketing :
1- The Power of Free
Zynga understands how the power of free entices people to play their games. People are
naturally adverse to risk and, because making a purchasing decision involves a potential
loss in the form of not getting value for money, people will often choose not to buy.
In the case of Zynga’s games, this risk has been minimized or removed entirely, so people
have no reason not to try them. Once they are involved with the game world, they have the
opportunity to purchase items that will improve their performance in the game.
MARKETING (CONT.)
2- Make the Most of Cross Promotion
As of 2013, Zynga had approximately 298 million users. This massive audience means that
Zynga is able to easily cross-promote its games. When Zynga is launching a new title, it
runs banner ads across the top of their past games, increasing the likelihood of piquing the
interest of people very much in their target market.
3- Change The Value Equation
Zynga have capitalized on another aspect of human psychology: the idea of time vs.
money. On the surface, paying for a digital item doesn’t seem to make a lot of sense, so
Farmville also gives you the opportunity to earn that same item by playing the game.
However, you can skip the time you would spend earning the item by paying for the item
instead and being able to use it immediately.
MARKETING (CONT.)
4- Quickly Achieve Critical Mass
The Zynga message boards allow regular players to discuss tips, share tutorials, and talk
with their fellow players. By creating a strong community, the players become more
immersed in the world of Zynga’s games and are less likely to leave.
5- Make Your Customer Your Brand Advocates
Zynga uses a method for what is known as the “friend tax.” This is the place in Zynga’s
games where, to progress, you need to send your friends invitations to the game.
MARKETING (CONT.)
6- Stay Top Of Mind
Zynga makes the best possible use of the News Feed. If players have been away from the
game for too long, Zynga will send them free gifts and a message that they miss them. They
also send out regular updates about the game to make sure players are always up to date.
The purpose of all this is, of course, to ensure Zynga stays on their customers’ radar.
MARKETING (CONT.)
• Zynga, Inc. reported unaudited consolidated earnings results for the third quarter and
nine months ended September 30, 2015. For the quarter, the company's total revenue
was $195,737,000 compared to $176,611,000 a year ago.
• Online game revenue was $162 million, an increase of 24% compared to the second
quarter of 2014 and an increase of 10% compared to the first quarter of 2015.
Advertising and other revenue was $38 million, an increase of 70% compared to the
second quarter of 2014 and an increase of 7% compared to the first quarter of 2015
FINANCE
• Zynga is spending an increasingly large amount of money on R&D
• Continuous investment in enhancing existing games and developing new games, and in
software development tools and code modification
• 2014 research and development expenses were $413.0 million and $727.0 million.
RESEARCH AND DEVELOPMENT (R&D)
• Zynga has its own datacenter.
 About 80% of Zynga users are able to logged onto servers in company’s own data
centers, while 20% playing in the Amazon cloud.
• Zynga has its own internal infrastructure called zCloud
 Z-cloud serves both company’s gaming needs, and third party developers to build
games.
• Zynga has its own platform (Zynga.com)
 Players are able to play both Zynga games and other games created by third party
game developers.
• Zynga has one operating segment with one business activity and developing
social games.
OPERATIONS & LOGISTICS
• Zynga has 2000 + employees in 7 different countries.
• Zynga has 800 + new hires in 2010.
• Objectives and Key Results
• Planning
 A management methodology that ensures that the company is focusing on the
same important goals throughout the organization.
HUMAN RESOURCES MANAGEMENT (HRM)
HRM – PROCESS
• Everyone is working towards the same results
 Focuses efforts
 Fosters coordination
• Keeps organization turned in.
• All operations have linked objectives and key results that support the company
• Are fun to do.
HRM – END PRODUCT
• Zynga has a vast user base which able Zynga to test everything, including in-game
copy, virtual goods, etc.
• Zynga has an analytics team that's able to analyze this data and extract user insights
that they can then cross-pollinate across all of their games.
• Classic ads : Facebook ads and internal ads (top banner when playing a game displays
other Zynga games available).
• In-game offers: Zynga has done great at integrating, within its existing games, missions
that require the player to install and play one or several of Zynga's other games in order
to get the reward for the original mission.
ZYNGA COMPETITIVE ADVANTAGES
Strengths
Factors Weight Score Weighted
Score
Comments
Customer/User base 20% 5 1
The company has a strong user base with
298 million users
Market Share 10% 4 0.4
Zynga is the world's leading provider of
online social game services
Partnership 15% 4 0.6
Zynga's partnership with the most top
leading gaming companies
Advanced Infrastructure
(Datacenter)
15% 3 0.45
80% of Zynga users logged into Zynga’s
own datacenter.
Respond to Market
needs
10% 3 0.3
INTERNAL FACTORS ANALYSIS SUMMARY (IFAS)
45
Weaknesses
Factors Weight Score
Weighted
Score
Comments
Financial Position 5% 2 0.1
The company has been facing a persistent
loss in revenue since 2010
Dependency risk 15% 3 0.45
Zynga is exposed to dependency risk of
using other parties tools, i.e. Facebook
platform and flash technology.
Concentration risk
due to focusing on
specific games
10% 1 0.1
Sudden drop in the popularity of one of
Zynga’s top performers could affect its
market share drastically
Total 100% 3.4
Zynga rate is above medium In the
internal assessment
INTERNAL FACTORS ANALYSIS SUMMARY (IFAS)
ANALYSIS OF STRATEGIC FACTORS
Zynga
47
Factors Weight Score Weighted Score
Strengths
Customer/User base 10% 5 0.5
Market Share 7% 4 0.28
Partnership 4% 4 0.16
Advanced Infrastructure
(Datacenter)
5% 3 0.15
Respond to Market needs 5% 3 0.15
Weaknesses
Financial Position 4% 2 0.08
Dependency risk 9% 3 0.27
Concentration risk due to focusing
on specific games
5% 1 0.05
SITUATIONAL ANALYSIS - STRATEGIC FACTOR
ANALYSIS SUMMARY MATRIX (SFAS)
48
SITUATIONAL ANALYSIS - STRATEGIC FACTOR
ANALYSIS SUMMARY MATRIX (SFAS)
Factors Weight Score
Weighted
Score
Opportunities
Global market 5% 5 0.25
Population increase 7% 4 0.28
New gaming platforms (Mobiles, consoles, tablets beside PCs) 8% 4 0.32
New technologies (3D, interaction) 5% 2 0.1
Increasing popularity of different social networks (Facebook, google+,… 4% 2 0.08
Threats
Increasing the aggressiveness of the competition/ new entrance 6% 2 0.12
Global legal and political restrictions to access content 4% 4 0.16
Low skilled labor market 8% 2 0.16
Copyright, patent infringements – counterfeit gaming 4% 1 0.04
49
• Current mission statement which is “Connecting the world through games” gives
the flavor of depending on social networks only
• In light of the key strategic factors identified in the strategic factor analysis summary,
Zynga should modify their mission statement and objectives by incorporating their
commitment to new platforms like mobiles, and consoles and stress on global market
existence.
REVIEW OF MISSION AND OBJECTIVES
STRATEGIC ALTERNATIVES
AND RECOMMENDED STRATEGY
Zynga
51
STRATEGIC ALTERNATIVES
TOWS MATRIX ANALYSIS
Internal Factors
(IFAS Table)
External Factors
(EFAS Table)
Strengths (S)
S1 Customer/User base
S2 Market Share
S3 Partnership
S4 Advanced Infrastructure
S5 Respond to Market needs
Weaknesses (W)
W1 Financial Position
W2 Dependency risk
W3 Concentration risk
(focusing on specific
games)
Opportunities (O)
O1 Global market
O2 Population increase
O3 New gaming platforms (Mobiles, consoles)
O4 New technologies (3D, interaction)
O5 Increasing popularity of different social networks
(Facebook, google+,…)
S1 O3 O4 Product development
S2 S5 O1 O2 O5 Market
development
S1 S2 S3 O1 O2 O5 market
penetration & increase market share
S3 O3 O5 Related diversification
S3 S4 O3 O4 Differentiation strategy
W2 O3 O5
Diversification
W3 O4 R&D
Threats (T)
T1 Increasing aggressiveness of competition
T2 legal and political restrictions to access content
T3 Low skilled labor market
T4 Copyright, patent infringements
S3 T1 alliance strategy W1 W3 T3 Pause
strategy (stability)
W3 T3 HR strategy
52
STRATEGIC ALTERNATIVES
ALTERNATIVE 1 – MARKET DEVELOPMENT
WHY?
• Based on Recent report, 59% of Zynga‟s revenue
came from US market, while the remaining 41%
were from International market.
• There is a significant growth in online/mobile video
games industry in Asia, especially in China. The
growth of online/mobile game in China is 266%
larger than in US.
• Therefore, business expansion to Asia/China
market is a great alternative
Zynga should expand its business globally to markets like Asia
52
HOW?
1. PARTNERSHIP WITH RENREN
• Renren is one of the biggest social networking services in China
(Facebook of China)
• Renren is strong in casual gaming, but not in social gaming
• Why Zynga-Renren partnership is beneficial to both?
• Zynga can expand its user base to Asia, especially China as the
biggest market, and generate more revenue.
• By enhancing their game portal with Zynga’s successful games,
Renren can increase its MAU rate
HOW?
1. PARTNERSHIP WITH RENREN
2. Build a localized version of Zynga’s game platform: zynga.cn
3. Build partnership with local game developers to distribute their games into Zynga‟s
platform, or do acquisitions of local game company
Pros.
China Internet growth
Population prospect
Lock-in effect
Cons.
Cultural difference
Regulation Issue
High competition
53
STRATEGIC ALTERNATIVES
ALTERNATIVE 2 – PRODUCT DEVELOPMENT
Zynga should develop & publish new games (social educational)
53
HOW?
• B2B PARTNERSHIP WITH AMAZON
• Bundle Zynga games with Digital Textbooks.
• Using educational characteristics of Zynga games on
Digital Textbooks or service them through Digital Textbook
platform “Whispercast”
WHY?
• Estimated revenues of Digital Textbooks: $2.5 billion by 2017
• The number of US students under 18: 55 million
• Government policy: Bring digital textbooks to all US students by 2017
• Main participants of device and platform: Apple, Amazon
Pros.
Follow environment changes
Get stable revenue stream
Take Prior occupation of the Market
Cons.
High development costs
Improve brand image to be education friendly
1
Number of
users
Profit margin
per user
Game quality
Cost
Effeciency
Brand
Awareness
Alt 1
Alt 2
54
RECOMMENDED STRATEGY
• Corporate strategy
Competitive Analysis Alt 1 Alt 2
Number of users 5 2
Profit margin per user 2 4
Game quality 3 4
Cost Efficiency 5 4
Brand Awareness 4 2
Avg. Score 3.8 3.2
55
RECOMMENDED STRATEGY
• Business strategy
• Cost leadership continue to examine cost structures and business model to
follow cost cutting measures like closing unprofitable game lines.
• Use profits resulted from cost leadership strategy to spend more on R&D to
achieve differentiation among other companies.
• Zynga has to differentiate itself from it’s competitors (license new/old characters)
• Functional strategy
• HRM strategy to attract more talented employees from the market and retain
current skilled employees as well as increasing acquired employees loyalty.
• R&D strategy to develop new games & apps using new technologies to
differentiate company products
STRATEGY IMPLEMENTATION
Zynga
57
STRATEGY IMPLEMENTATION
• While strategy planning is the responsibility of top management, strategy implementation is
the responsibility of the whole company.
• New strategy should be cascaded to all functional departments to be aligned with new
objectives and strategies
• Top management & legal department is responsible to make the new partnership with
Renren.
• Marketing department is responsible for promoting the new localized version of Zynga.cn
and to attract local developers to distribute their games on Zynga platform
• HR department to arrange new technologies & platforms training for developers and attract
new talents
• There is no significant organizational structure should be incorporated as the company
already used to make acquisitions and partnerships with current structure.
STRATEGY EVALUATION AND CONTROL
Zynga
STRATEGY EVALUATION AND CONTROL
• Strategy evaluation in a timely manner is vital for a company to alert management to a
potential problems before they become critical.
• Strategy Evaluation and control process will go through 4 steps:
 Strategy Evaluation.
 KPIs Identification.
 Compare expected results with actual results.
 Take corrective actions.
STRATEGY EVALUATION AND CONTROL
• Strategy Evaluation
 Strategy consistency
All company’s departments objectives are aligned with company overall strategy and
objective.
 Strategy Coherence
A strategy is responding to the company internal and external factors.
 Strategy Feasibility
Company has the physical, human, and financial resources to implement the
recommended strategy.
STRATEGY EVALUATION AND CONTROL
• KPIs Identification
 Strategy Key performance indicators will be based mainly on :
 Increasing number of user base.
 Increasing company profit.
 Increasing company market share.
 Increasing brand awareness
 Decreasing both variable and fixed costs.
• Compare expected results with actual results
 KPIs will be evaluated in a quarterly bases with an expectation of increasing in each
factor with 5 % compared to the same quarter on previous year.
• Take Corrective Actions
 Corrective actions should be taken in case expected results didn’t achieve or in case of
a critical changes in company internal or external factors.
STRATEGY EVALUATION AND CONTROL
Q & A
STRATEGIC AUDIT OF ZYNGA INC.
Zynga Annual Report 2014
PWC Global entertainment and media outlook 2012-2016
NCSoft IR Report Nov 2012
http://Zynga.com
http://www.portal.euromonitor.com/
http://www.businessinsider.com/zynga-shuts-baltimore-new-
york-austin-mckinney-offices-2013-2
http://www.reddit.com/r/IAmA/comments/pc6j9/iama_former_f
ulltime_zynga_engineer_quit_6_months/
http://techcrunch.com/2012/10/23/zynga-layoffs/
http://www.cultofandroid.com/20765/zynga-announces-
petville-mafia-wars-2-and-nine-other-games-are-to-close/
http://www.businessinsider.com/most-profitable-games-app-
annie-2013-2?op=1
http://mashable.com/2012/02/01/zynga-facebook-revenue/
http://en.wikipedia.org/wiki/History_of_massively_multiplayer
_online_games
http://www.businessweek.com/magazine/zyngas-
quest-for-bigspending-whales-07072011.html
http://news.cnet.com/8301-13506_3-57343062-
17/zynga-may-have-a-great-ipo-but-beyond-that-
look-out
http://www.businessinsider.com/why-mobile-gaming-
companies-are-anything-but-screwed-2012-12
http://www.businessinsider.com/this-is-zyngas-next-
billion-dollar-opportunity-2012-1
http://www.bloomberg.com/news/2012-12-06/zynga-
files-with-nevada-for-real-money-online-gaming-in-u-
s-1-.html
http://blogs.wsj.com/digits/2012/11/13/line-asias-
answer-to-whatsapp/
http://en.wikipedia.org/wiki/History_of_video_games
http://en.wikipedia.org/wiki/PC_game
http://en.wikipedia.org/wiki/History_of_online_games
REFERENCESREFERENCES
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Zynga Inc. Strategic Audit

  • 1. STRATEGIC AUDIT OF ZYNGA INC.
  • 2. AGENDA • Company overview. • Strategic Posture. • External Environment. • Internal Environment. • Analysis of strategic factors. • Strategic Alternatives and Recommended Strategy. • Strategy Implementation. • Strategy evaluation and control. • References.
  • 4. 4 • Founded in 2007 by Mark Pincus • Based in San Francisco, CA • Pioneer and innovator of social games and a leader in making “play” as a core activity on the Internet • Owner of several top social media games for mobile/tablets systems such as: Farmville, Zynga Poker, Mafia Wars, Words with Friends • Generally, all games are free to play and revenue is generated through the in-game sale of virtual goods, mobile game download fees, and advertising services COMPANY OVERVIEW
  • 7. MISSION STATEMENT “Connecting the world through games” • Although the mission statement is easy to read and understand, it is poor and need more work to be done. • It only defines business domain without mentioning why it is attractive • It doesn’t mention anything about interests of the stakeholders or company’s responsibility towards them. • It doesn’t talk about competitive advantage, culture, values and beliefs • It doesn’t give any direction to managers and employees to behave and take decisions correctly.
  • 8. OBJECTIVES • Profitability • Turning last years losses to profits • Viability • Moving to console and mobile gaming instead of Facebook; on which it depends for the previous period.
  • 9. STRATEGIES • Corporate Growth Strategy • Product Development : Providing the existing markets with new games operating on mobiles and game console to catch the rapid growth in smart phones gaming market and people shift to play on mobile devices instead of PCs • Acquisition of companies experienced in mobile games • Investing in its owned infrastructure (zCloud) to reduce reliance on third-party web hosting services (Vertical integration) • Investing resources in integrating and operating some games on additional platforms including Google+, mixi, and Tencent. • Functional Strategy – HR • Hiring, developing, motivate, and retain talented employees • Unique employees benefits, Unique vacation policy.
  • 10. POLICIES • Privacy Policy • Tells how the company collect, store, use and disclose personal information when providing these services to customers. • Unique HR policies • Specially in vacations • CSR Policy • Company made great efforts in earthquakes disasters in both Tahiti and Japan in which Zynga and its game players have demonstrated a leadership position that should serve as an inspiration to other brands.
  • 12. COMMON STOCK STRUCTURE • Three-class common stock structure publicly traded • Class C – 70 votes per share • Class B – 7 votes per share • Class A – 1 vote per share • Only the founder, chairman & CEO; Mark Pincus; is holder of class C common shares.
  • 13. BOARD OF DIRECTORS • Only One internal and seven external members • Mark Pincus L. John Doerr • Regina E. Dugan Frank Gibeau • William Gordon Louis J. Lavigne • Sunil Paul Ellen F. Siminoff • No cash compensation had been granted to non-employee directors for their services. • Instead they granted to purchase shares under company’s equity incentive plans
  • 14. TOP MANAGEMENT • Mark Pincus- Founder, chairman & CEO • Company growth is heavily dependent on efforts to employee talents • High demand of game designers, product managers, engineers and executives • Devote resources to indentifying, recruiting, hiring, training, successfully integrating and retaining employees • Maintains team spirit in employees and applies effective human resource strategies to encourage and motivate employees to perform their best • There is a spirit of competition within Zynga’s structure. Each unit operates separately to produce new games/products/ideas
  • 16. FINANCIAL OUTLOOK • Revenues are declining YOY since 2013. • Intensive investment in R&D. • Costs are exceeding revenue generated • Uncontrolled G&A expenses is growing despite the revenue decline.
  • 17. REVENUE STREAMS • Total revenues are declined in both online game and advertising revenue mainly due to decline in existing games and the lack of successful new launches. • Increase the focus over the revenue diversification as well as the continues investment on R&D to develop new games to secure the revenue growth. • 55% of the online revenues are generated from three games only, however the remaining 45%, no other game generated more than 10% of online game revenues during 2014.
  • 18. INITIATIVES TO IMPROVE PERFORMANCE Set of initiatives were concluded to reduce the cost and improve the financial performance: • Consolidation of third party data center facilities and increasing usage of Zynga’s own datacenters reduced the depreciation costs as well as lower cost driven from lower data usage. • Reduced labor cost and related discretionary costs. • Restructured the R&D as well as reallocated the facilities and overhead costs and decrease in headcount related expenses. • Increase in marketing expense due to higher mobile player acquisition costs and consumer marketing costs attributed from the launch of new games. • Reduced third party customer service.
  • 19. SOCIAL GAMING MARKET 19 Active users share Top Facebook games
  • 21. EXTERNAL ANALYSIS - PESTEL ANALYSIS • Political This includes government regulations and legal issues, and defines both formal and informal rules under which the firm must operate • Stability • Employment laws • Economic Economic factors affect the purchasing power of potential customers and the firm's cost of capital. • Interest Rate Fluctuation Risk The company is subject to market risk due to changes in prevailing interest rates that may cause the principal amount of the investment to fluctuate. • Exchange rates Zynga is operating globally, which put its receivables and payables exposed to the fluctuation risk of foreign exchange rates • Inflation rate Inflation doesn’t have a material effect on Zynga’s business, However if Zynga’s costs are to become subject to significant inflationary pressures
  • 22. EXTERNAL ANALYSIS - PESTEL ANALYSIS • Social These factors affect Zynga’s customers‘ needs and the size of potential markets. Some social factors include: • Size of demographic market segments Zynga is operating globally; there are no demographic limits for expanding its business operation. • Population growth rate The higher population growth rate the better opportunity to grow and increase business volumes. • The availability of a well-trained workforce: Remains one of the challenges to sustain the company growth, well trained workforce is one of the most important factors in the technological fields.
  • 23. EXTERNAL ANALYSIS - PESTEL ANALYSIS • Technological Technological factors can lower barriers to entry, reduce minimum efficient production levels. • R&D activity Continuous investment in R&D is a must to increase the products portfolio and to increase the company market share. • Rate of technological change Due to the technological changes, the company has to cope all changes occurred in order to be always attractive to its customers.
  • 24. EXTERNAL ANALYSIS - PESTEL ANALYSIS • Legal • Government relations Zynga is subject to number of foreign and domestic laws and regulations that affect companies conducting business on the internet. • Privacy issues Zynga is subject to federal, state, and foreign laws regarding privacy and protection of the players’ data.
  • 25. EXTERNAL ANALYSIS - PORTER’S FIVE FORCES Threat of New Entrants (Medium bargaining power) • No much complicated barriers to entry. • Higher penetration affected by the technology evolution and increasing the mobile and social media penetration • Attractive industry specially for the developers to create their own games however it needs a real talent to be able to compete the existing market players Bargaining Power of Suppliers (High) High bargaining power of suppliers as creation of the games is depend on • Talented developers • Adobe flash player technology • Restricted copyrights of the game content. • Infrastructure (Data center) Bargaining Power of buyers (High) • Consumers have a very wide selection of games. • Variety of free & demo games are easy of access • Increased globalization also adds to the bargaining power of the consumer.
  • 26. EXTERNAL ANALYSIS - PORTER’S FIVE FORCES Threat of Substitute Products or Services (Medium) One of the major threats of substitution is facing the innovation in other industries such as media, movies and music as well as different amusing tools on the internet. Intensity of Rivalry Among Competitors (High) Competition is aggressive, a lot of established companies with famous games are competing as well as different technologies with advanced equipment i.e. Xbox and PlayStation. Major competitors: • DENA CO., LTD (Japan) • Electronic Arts (EA) (U.S.) • Gree Games (Japan) • Gameloft (Europe)
  • 27. Opportunities Factors Weight Score Weighted Score Comments Global market 10% 5 0.5 Several acquisitions and launches of new studios & offices Population increase 15% 4 0.6 Number one in terms of active user base (far from all competitors) New gaming platforms (Mobiles, consoles, tablets beside PCs) 20% 4 0.8 Varity of games applicable for different platforms New technologies (3D, interaction) 10% 2 0.2 Still trying (didn't reach maturity) Increasing popularity of different social networks (Facebook, google+,… 5% 2 0.1 Still depending on a sole partnership with Facebook EXTERNAL FACTORS ANALYSIS SUMMARY (EFAS)
  • 28. 28 Threats Factors Weight Score Weighted Score Comments Increasing the aggressiveness of the competition/ new entrance 10% 2 0.2 No exclusivity deals with any of its partners Global legal and political restrictions to access content 5% 4 0.2 Following legal instructions and stick to privacy rules Low skilled labor market 20% 2 0.4 Having challenges in acquiring talents Copyright, patent infringements – counterfeit gaming 5% 1 0.05 Didn't develop any attractive copyrighted characters or even gain any privilege of using any famous characters Total 100% 3.05 Zynga rate is average In the external assessment EXTERNAL FACTORS ANALYSIS SUMMARY (EFAS)
  • 30. • Matrix corporate structure is followed • Functional and product forms are combined simultaneously at the same level • Matrix structure matches current maturity organizational life cycle • SBU’s managed independently and report directly to CEO • Company structure provides decentralization of decision making CORPORATE STRUCTURE
  • 31. CORPORATE CULTURE • Entrepreneurial, execution focused, fiercely competitive and stressful culture. • Zynga’s headquarters, nicknamed “The Dog House, features a coffee shop, gaming arcade, gym, basketball court, and wellness center. • Zynga employees enjoy perks such as free gourmet meals, access to an in-house nutritionist, personal training, and insurance coverage for pets • Culture encouraged employees to work hard and play hard • Very hard to keep and maintain culture as most of employees obtained through acquisitions • Varying reports from employees about company culture, some are very positive, and others are extremely negative due to the stressful culture
  • 32. • After only four years in existence, Zynga is already earning over a billion dollars a year in revenue. No gaming company has grown so big in so little time before. • Zynga has the largest gaming base of any other mobile software company .part of zynga’s draw is the free to play revenue model that allow everyone to try out the game with Zero level commitment. • Zynga has strategic acquisition that are second to none in its segment . this is allows for the best effects, graphics, sound and ease of play for the consumer who is already aware and active on Zynga’s platform • Competitors often have to spend as much as 50% of their budgets on marketing and advertising, where Zynga is already flush with popularity and exposure. CORPORATE RESOURCES - MARKETING
  • 33. Zynga has 7 basic strategies in marketing : 1- The Power of Free Zynga understands how the power of free entices people to play their games. People are naturally adverse to risk and, because making a purchasing decision involves a potential loss in the form of not getting value for money, people will often choose not to buy. In the case of Zynga’s games, this risk has been minimized or removed entirely, so people have no reason not to try them. Once they are involved with the game world, they have the opportunity to purchase items that will improve their performance in the game. MARKETING (CONT.)
  • 34. 2- Make the Most of Cross Promotion As of 2013, Zynga had approximately 298 million users. This massive audience means that Zynga is able to easily cross-promote its games. When Zynga is launching a new title, it runs banner ads across the top of their past games, increasing the likelihood of piquing the interest of people very much in their target market. 3- Change The Value Equation Zynga have capitalized on another aspect of human psychology: the idea of time vs. money. On the surface, paying for a digital item doesn’t seem to make a lot of sense, so Farmville also gives you the opportunity to earn that same item by playing the game. However, you can skip the time you would spend earning the item by paying for the item instead and being able to use it immediately. MARKETING (CONT.)
  • 35. 4- Quickly Achieve Critical Mass The Zynga message boards allow regular players to discuss tips, share tutorials, and talk with their fellow players. By creating a strong community, the players become more immersed in the world of Zynga’s games and are less likely to leave. 5- Make Your Customer Your Brand Advocates Zynga uses a method for what is known as the “friend tax.” This is the place in Zynga’s games where, to progress, you need to send your friends invitations to the game. MARKETING (CONT.)
  • 36. 6- Stay Top Of Mind Zynga makes the best possible use of the News Feed. If players have been away from the game for too long, Zynga will send them free gifts and a message that they miss them. They also send out regular updates about the game to make sure players are always up to date. The purpose of all this is, of course, to ensure Zynga stays on their customers’ radar. MARKETING (CONT.)
  • 37. • Zynga, Inc. reported unaudited consolidated earnings results for the third quarter and nine months ended September 30, 2015. For the quarter, the company's total revenue was $195,737,000 compared to $176,611,000 a year ago. • Online game revenue was $162 million, an increase of 24% compared to the second quarter of 2014 and an increase of 10% compared to the first quarter of 2015. Advertising and other revenue was $38 million, an increase of 70% compared to the second quarter of 2014 and an increase of 7% compared to the first quarter of 2015 FINANCE
  • 38. • Zynga is spending an increasingly large amount of money on R&D • Continuous investment in enhancing existing games and developing new games, and in software development tools and code modification • 2014 research and development expenses were $413.0 million and $727.0 million. RESEARCH AND DEVELOPMENT (R&D)
  • 39. • Zynga has its own datacenter.  About 80% of Zynga users are able to logged onto servers in company’s own data centers, while 20% playing in the Amazon cloud. • Zynga has its own internal infrastructure called zCloud  Z-cloud serves both company’s gaming needs, and third party developers to build games. • Zynga has its own platform (Zynga.com)  Players are able to play both Zynga games and other games created by third party game developers. • Zynga has one operating segment with one business activity and developing social games. OPERATIONS & LOGISTICS
  • 40. • Zynga has 2000 + employees in 7 different countries. • Zynga has 800 + new hires in 2010. • Objectives and Key Results • Planning  A management methodology that ensures that the company is focusing on the same important goals throughout the organization. HUMAN RESOURCES MANAGEMENT (HRM)
  • 42. • Everyone is working towards the same results  Focuses efforts  Fosters coordination • Keeps organization turned in. • All operations have linked objectives and key results that support the company • Are fun to do. HRM – END PRODUCT
  • 43. • Zynga has a vast user base which able Zynga to test everything, including in-game copy, virtual goods, etc. • Zynga has an analytics team that's able to analyze this data and extract user insights that they can then cross-pollinate across all of their games. • Classic ads : Facebook ads and internal ads (top banner when playing a game displays other Zynga games available). • In-game offers: Zynga has done great at integrating, within its existing games, missions that require the player to install and play one or several of Zynga's other games in order to get the reward for the original mission. ZYNGA COMPETITIVE ADVANTAGES
  • 44. Strengths Factors Weight Score Weighted Score Comments Customer/User base 20% 5 1 The company has a strong user base with 298 million users Market Share 10% 4 0.4 Zynga is the world's leading provider of online social game services Partnership 15% 4 0.6 Zynga's partnership with the most top leading gaming companies Advanced Infrastructure (Datacenter) 15% 3 0.45 80% of Zynga users logged into Zynga’s own datacenter. Respond to Market needs 10% 3 0.3 INTERNAL FACTORS ANALYSIS SUMMARY (IFAS)
  • 45. 45 Weaknesses Factors Weight Score Weighted Score Comments Financial Position 5% 2 0.1 The company has been facing a persistent loss in revenue since 2010 Dependency risk 15% 3 0.45 Zynga is exposed to dependency risk of using other parties tools, i.e. Facebook platform and flash technology. Concentration risk due to focusing on specific games 10% 1 0.1 Sudden drop in the popularity of one of Zynga’s top performers could affect its market share drastically Total 100% 3.4 Zynga rate is above medium In the internal assessment INTERNAL FACTORS ANALYSIS SUMMARY (IFAS)
  • 46. ANALYSIS OF STRATEGIC FACTORS Zynga
  • 47. 47 Factors Weight Score Weighted Score Strengths Customer/User base 10% 5 0.5 Market Share 7% 4 0.28 Partnership 4% 4 0.16 Advanced Infrastructure (Datacenter) 5% 3 0.15 Respond to Market needs 5% 3 0.15 Weaknesses Financial Position 4% 2 0.08 Dependency risk 9% 3 0.27 Concentration risk due to focusing on specific games 5% 1 0.05 SITUATIONAL ANALYSIS - STRATEGIC FACTOR ANALYSIS SUMMARY MATRIX (SFAS)
  • 48. 48 SITUATIONAL ANALYSIS - STRATEGIC FACTOR ANALYSIS SUMMARY MATRIX (SFAS) Factors Weight Score Weighted Score Opportunities Global market 5% 5 0.25 Population increase 7% 4 0.28 New gaming platforms (Mobiles, consoles, tablets beside PCs) 8% 4 0.32 New technologies (3D, interaction) 5% 2 0.1 Increasing popularity of different social networks (Facebook, google+,… 4% 2 0.08 Threats Increasing the aggressiveness of the competition/ new entrance 6% 2 0.12 Global legal and political restrictions to access content 4% 4 0.16 Low skilled labor market 8% 2 0.16 Copyright, patent infringements – counterfeit gaming 4% 1 0.04
  • 49. 49 • Current mission statement which is “Connecting the world through games” gives the flavor of depending on social networks only • In light of the key strategic factors identified in the strategic factor analysis summary, Zynga should modify their mission statement and objectives by incorporating their commitment to new platforms like mobiles, and consoles and stress on global market existence. REVIEW OF MISSION AND OBJECTIVES
  • 51. 51 STRATEGIC ALTERNATIVES TOWS MATRIX ANALYSIS Internal Factors (IFAS Table) External Factors (EFAS Table) Strengths (S) S1 Customer/User base S2 Market Share S3 Partnership S4 Advanced Infrastructure S5 Respond to Market needs Weaknesses (W) W1 Financial Position W2 Dependency risk W3 Concentration risk (focusing on specific games) Opportunities (O) O1 Global market O2 Population increase O3 New gaming platforms (Mobiles, consoles) O4 New technologies (3D, interaction) O5 Increasing popularity of different social networks (Facebook, google+,…) S1 O3 O4 Product development S2 S5 O1 O2 O5 Market development S1 S2 S3 O1 O2 O5 market penetration & increase market share S3 O3 O5 Related diversification S3 S4 O3 O4 Differentiation strategy W2 O3 O5 Diversification W3 O4 R&D Threats (T) T1 Increasing aggressiveness of competition T2 legal and political restrictions to access content T3 Low skilled labor market T4 Copyright, patent infringements S3 T1 alliance strategy W1 W3 T3 Pause strategy (stability) W3 T3 HR strategy
  • 52. 52 STRATEGIC ALTERNATIVES ALTERNATIVE 1 – MARKET DEVELOPMENT WHY? • Based on Recent report, 59% of Zynga‟s revenue came from US market, while the remaining 41% were from International market. • There is a significant growth in online/mobile video games industry in Asia, especially in China. The growth of online/mobile game in China is 266% larger than in US. • Therefore, business expansion to Asia/China market is a great alternative Zynga should expand its business globally to markets like Asia 52 HOW? 1. PARTNERSHIP WITH RENREN • Renren is one of the biggest social networking services in China (Facebook of China) • Renren is strong in casual gaming, but not in social gaming • Why Zynga-Renren partnership is beneficial to both? • Zynga can expand its user base to Asia, especially China as the biggest market, and generate more revenue. • By enhancing their game portal with Zynga’s successful games, Renren can increase its MAU rate HOW? 1. PARTNERSHIP WITH RENREN 2. Build a localized version of Zynga’s game platform: zynga.cn 3. Build partnership with local game developers to distribute their games into Zynga‟s platform, or do acquisitions of local game company Pros. China Internet growth Population prospect Lock-in effect Cons. Cultural difference Regulation Issue High competition
  • 53. 53 STRATEGIC ALTERNATIVES ALTERNATIVE 2 – PRODUCT DEVELOPMENT Zynga should develop & publish new games (social educational) 53 HOW? • B2B PARTNERSHIP WITH AMAZON • Bundle Zynga games with Digital Textbooks. • Using educational characteristics of Zynga games on Digital Textbooks or service them through Digital Textbook platform “Whispercast” WHY? • Estimated revenues of Digital Textbooks: $2.5 billion by 2017 • The number of US students under 18: 55 million • Government policy: Bring digital textbooks to all US students by 2017 • Main participants of device and platform: Apple, Amazon Pros. Follow environment changes Get stable revenue stream Take Prior occupation of the Market Cons. High development costs Improve brand image to be education friendly
  • 54. 1 Number of users Profit margin per user Game quality Cost Effeciency Brand Awareness Alt 1 Alt 2 54 RECOMMENDED STRATEGY • Corporate strategy Competitive Analysis Alt 1 Alt 2 Number of users 5 2 Profit margin per user 2 4 Game quality 3 4 Cost Efficiency 5 4 Brand Awareness 4 2 Avg. Score 3.8 3.2
  • 55. 55 RECOMMENDED STRATEGY • Business strategy • Cost leadership continue to examine cost structures and business model to follow cost cutting measures like closing unprofitable game lines. • Use profits resulted from cost leadership strategy to spend more on R&D to achieve differentiation among other companies. • Zynga has to differentiate itself from it’s competitors (license new/old characters) • Functional strategy • HRM strategy to attract more talented employees from the market and retain current skilled employees as well as increasing acquired employees loyalty. • R&D strategy to develop new games & apps using new technologies to differentiate company products
  • 57. 57 STRATEGY IMPLEMENTATION • While strategy planning is the responsibility of top management, strategy implementation is the responsibility of the whole company. • New strategy should be cascaded to all functional departments to be aligned with new objectives and strategies • Top management & legal department is responsible to make the new partnership with Renren. • Marketing department is responsible for promoting the new localized version of Zynga.cn and to attract local developers to distribute their games on Zynga platform • HR department to arrange new technologies & platforms training for developers and attract new talents • There is no significant organizational structure should be incorporated as the company already used to make acquisitions and partnerships with current structure.
  • 58. STRATEGY EVALUATION AND CONTROL Zynga
  • 60. • Strategy evaluation in a timely manner is vital for a company to alert management to a potential problems before they become critical. • Strategy Evaluation and control process will go through 4 steps:  Strategy Evaluation.  KPIs Identification.  Compare expected results with actual results.  Take corrective actions. STRATEGY EVALUATION AND CONTROL
  • 61. • Strategy Evaluation  Strategy consistency All company’s departments objectives are aligned with company overall strategy and objective.  Strategy Coherence A strategy is responding to the company internal and external factors.  Strategy Feasibility Company has the physical, human, and financial resources to implement the recommended strategy. STRATEGY EVALUATION AND CONTROL
  • 62. • KPIs Identification  Strategy Key performance indicators will be based mainly on :  Increasing number of user base.  Increasing company profit.  Increasing company market share.  Increasing brand awareness  Decreasing both variable and fixed costs. • Compare expected results with actual results  KPIs will be evaluated in a quarterly bases with an expectation of increasing in each factor with 5 % compared to the same quarter on previous year. • Take Corrective Actions  Corrective actions should be taken in case expected results didn’t achieve or in case of a critical changes in company internal or external factors. STRATEGY EVALUATION AND CONTROL
  • 63. Q & A STRATEGIC AUDIT OF ZYNGA INC.
  • 64. Zynga Annual Report 2014 PWC Global entertainment and media outlook 2012-2016 NCSoft IR Report Nov 2012 http://Zynga.com http://www.portal.euromonitor.com/ http://www.businessinsider.com/zynga-shuts-baltimore-new- york-austin-mckinney-offices-2013-2 http://www.reddit.com/r/IAmA/comments/pc6j9/iama_former_f ulltime_zynga_engineer_quit_6_months/ http://techcrunch.com/2012/10/23/zynga-layoffs/ http://www.cultofandroid.com/20765/zynga-announces- petville-mafia-wars-2-and-nine-other-games-are-to-close/ http://www.businessinsider.com/most-profitable-games-app- annie-2013-2?op=1 http://mashable.com/2012/02/01/zynga-facebook-revenue/ http://en.wikipedia.org/wiki/History_of_massively_multiplayer _online_games http://www.businessweek.com/magazine/zyngas- quest-for-bigspending-whales-07072011.html http://news.cnet.com/8301-13506_3-57343062- 17/zynga-may-have-a-great-ipo-but-beyond-that- look-out http://www.businessinsider.com/why-mobile-gaming- companies-are-anything-but-screwed-2012-12 http://www.businessinsider.com/this-is-zyngas-next- billion-dollar-opportunity-2012-1 http://www.bloomberg.com/news/2012-12-06/zynga- files-with-nevada-for-real-money-online-gaming-in-u- s-1-.html http://blogs.wsj.com/digits/2012/11/13/line-asias- answer-to-whatsapp/ http://en.wikipedia.org/wiki/History_of_video_games http://en.wikipedia.org/wiki/PC_game http://en.wikipedia.org/wiki/History_of_online_games REFERENCESREFERENCES