Zynga

• 1. Introduction

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  Zynga, the company named after a bulldog, reached ten million daily players in just six weeks after launching FarmVille on Facebook in June 2009. That number is worth sitting with. Not ten million people who had ever heard of the game. Ten million people opening it every single day. The question that follows is obvious: how did a company founded barely two years earlier, under the name Presidio Media, build something that big that fast? And perhaps the harder question: why did it struggle so badly to hold onto what it had built?

• 2. The Founding and the Dog

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  Mark Pincus and five founding team members, including Eric Schiermeyer, Justin Waldron, Michael Luxton, Steve Schoettler, and Andrew Trader, started the company in April 2007. The name Presidio Media lasted only a few months before Pincus renamed it after his American bulldog, Zinga. That dog's face became the company logo, a playful signal of what Pincus wanted the culture to feel like.

  The first game, Texas Hold 'Em Poker, now known as Zynga Poker, arrived on Facebook in July 2007. It was the first game Facebook ever introduced on its social networking platform. By April 2009, just under two years later, Zynga had become the Facebook app developer with the most monthly active users, with 40 million people playing its games in a single month. That momentum prompted the company to open its first external studio, Zynga East in Baltimore, led by Brian Reynolds.

• 3. FarmVille and the Peak

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  In June 2009, Zynga acquired MyMiniLife, the small studio that had built and launched FarmVille on Facebook. Within weeks the game hit ten million daily active users, a first for any Facebook title. By February 2010, FarmVille had over 80 million players. Those numbers translated into financial weight: at one point during 2011, Zynga accounted for 19 percent of Facebook's total revenue.

  In May 2010, Facebook and Zynga formalized their bond with a five-year agreement to expand the use of Facebook Credits across Zynga's games. That agreement deepened as July 2011 approached, when Zynga filed an addendum to its SEC registration statement detailing the arrangement. By December 2010, though, a new title had already overtaken FarmVille inside Zynga's own catalogue: CityVille reached over 61 million monthly active users and a base of more than 16 million daily active users.

  The company's first IPO filing, submitted to the SEC on the 1st of July 2011, sought to raise up to $1 billion. At the time, Zynga employed 2,000 people. Trading opened on NASDAQ on the 16th of December 2011 under the ticker ZNGA. The stock closed down 5 percent on its first day.

• 4. The Acquisition Machine

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  Between 2008 and 2022, Zynga bought studios at a pace that reshaped the mobile games industry. The December 2010 acquisition of Newtoy, Inc., the McKinney, Texas studio behind Words with Friends and Chess with Friends, brought one of Zynga's most durable franchises into the fold. The March 2012 purchase of OMGPop, the creator of Draw Something, cost $180 million.

  The most expensive single deal before the Take-Two era was the January 2014 acquisition of NaturalMotion for $527 million. NaturalMotion, based in Oxford, brought with it CSR Racing and the mobile hit Clumsy Ninja. In June 2020, Zynga paid $1.8 billion for Peak, the Turkish studio behind Toy Blast. Two months later, Rollic, also Turkish, was acquired for $180 million. By August 2021, Zynga had spent $525 million to bring StarLark, a Chinese studio behind Golf Rival, into the group.

  Not every bet paid off. OMGPop was shut down by June 2013, only fifteen months after the $180 million purchase. Zynga East in Baltimore, the company's first external studio, closed in February 2013. By mid-2013, offices in New York, Los Angeles, and Dallas were all shuttered in the same round of layoffs.

• 5. Decline, Departures, Recovery

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  On the 3rd of June 2013, Zynga announced layoffs of 520 employees, roughly 18 percent of its workforce. By July 2013, the company had reportedly lost nearly half of its user base from the year before, and investors cut Zynga's valuation by $400 million. That same month, Zynga pulled back from plans to enter the real-money gaming market in the United States. Shares dropped 13 percent on the announcement.

  The company turned to Don Mattrick, Microsoft's Interactive Entertainment President, to serve as CEO in July 2013. Mattrick lasted less than two years. He left in April 2015 and Pincus returned. First quarter results for 2014 had already made the scale of the problem clear: daily active users had fallen from 53 million to 28 million year-over-year.

  Frank Gibeau, former head of mobile for Electronic Arts, took over as CEO on the 7th of March 2016. Under his leadership the company stabilized. In the fourth quarter of 2017, revenue reached $233.3 million, a 22 percent increase from the same quarter in 2016 and the best quarterly performance in five years. By the end of that year, shares had gained 56 percent, closing at $4.00.

• 6. Controversies and Legal Battles

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  Copying was the charge that followed Zynga most persistently. The launch of Mafia Wars drew a lawsuit from the makers of Mob Wars, whose attorney argued that Zynga had copied virtually every important aspect of their game. That suit settled out of court for between $7 million and $9 million. A September 2010 article in SF Weekly reported that an employee recalled Mark Pincus advising staff to copy competitors until Zynga matched their user numbers.

  In August 2012, Electronic Arts sued Zynga for copyright infringement, claiming that The Ville had copied expressive elements of The Sims Social. Zynga's counsel fired back, alleging that EA's SimCity Social bore an uncanny resemblance to CityVille. The two sides settled in February 2013, with each bearing its own legal costs.

  The company also pursued aggressive trademark protection. Zynga sent cease-and-desist letters to developers using the word "ville" in game names, targeting Blingville in January 2011, Quackville in November 2011, and Dungeonville afterward. In May 2012, Zynga sued Kobojo over PyramidVille; the suit settled in October 2012 with neither party paying the other.

  A July 2012 class action lawsuit alleged that Mark Pincus and other insiders sold shares before disappointing second-quarter results were made public. That case settled in August 2015 for $23 million. Then, in September 2019, a hacker operating under the name Gnosticplayers claimed to have breached Zynga's database of Words with Friends players and accessed 218 million registered accounts. The breach-tracking site Have I Been Pwned confirmed in December 2019 that more than 173 million accounts were affected.

• 7. The Take-Two Era

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  On the 10th of January 2022, Take-Two Interactive announced its intention to buy Zynga in a cash-and-stock deal valued at $12.7 billion. The price was $9.86 per share for all outstanding shares of Zynga. Both companies' shareholders approved the merger on the 19th of May 2022, and the transaction closed four days later, on the 23rd of May.

  The scale of what Take-Two absorbed is visible in one figure the combined company shares with investors: about 10 percent of the world's population plays a Zynga game every month. Zynga, for its part, claims that more than one billion people have played its games since its founding in 2007.

  In June 2023, during the FTC v. Microsoft trial, Microsoft Gaming CEO Phil Spencer disclosed that Microsoft had considered purchasing Zynga before Take-Two moved. The company that started in April 2007 as Presidio Media had become, by the time of its acquisition, one of the largest targets in the history of the video game industry.