Zelnick Zings Zynga

Zelnick Zings Zynga

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Take-Two CEO Strauss Zelnick says Zynga's metrics are "sketchy" and that disclosure problems are a big part of why it hasn't yet gone public.

It's been a rough week for Zynga. First there was bubbling criticism of the company's corrosive corporate culture and reports of many employees who plan to cash out and jump ship as soon as the company goes public; then came word that Zynga's player numbers have remained essentially flat since the end of 2009, suggesting that the company has hit a wall and has no idea how to get over it. And now the boss of Take-Two Interactive, publisher of franchises like BioShock and Grand Theft Auto, has for some reason decided to slip in a few shots of his own.

"Zynga is a direct marketing company, 97 percent of which don't pay them anything, three percent who do. They churn quite quickly and they get new customers. That is their model," he said yesterday at the Reuters Global Media Summit.

"I would argue being the number one player in [social gaming] is complicated, which is why Zynga hasn't gone public yet because their metrics are sketchy," he continued. "I think they have disclosure issues, I think you are seeing their acquisition costs go up, marketing costs go up and they have very high churn." In order to present a more accurate financial picture to potential investors, Zelnick added, Zynga needs to publish details about its rate of customer loss.

Zynga's IPO has generally been expected to be worth about $1 billion, although the company's recent issues could force that figure down. A Zynga rep had no comment on Zelnick's comments.

Source: Reuters

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The only reason they're taking it public is because they have finally found out that they need more money to run their system.

As for their player numbers remaining flat, why would that be a surprise? Everyone that wants to play their games already have an [Facebook] account. If they don't want one, there isn't much they [Zynga] can do to change that. All this means is that their market is saturated.... one more reason they need to go public.

I might be misinterpreting this a little, but how excatly is this a 'Zing' at Zynga. Other then the bad pun, it doesn't even seem like an attack, merely commenting on a competitors possible future money problems in a calm and reasonable manner.

Hey, maybe the reason they haven't gone public is that they don't want to be stuck doing the bidding of thousands of greedy shareholders, forcing them to ignore product quality and principles in favor of the bottom li--PFFFFFFWAHAHAHAHA. Nope. Couldn't say it with a straight face.

In all seriousness, though, if nothing else, a company that's already making the kind of scratch that Zynga does would have no need for the extra investment capital that going public generates, regardless of what their motivation or business model is, and if the company does care more about producing quality products than making tons of money, going public is a good way to flush that down the toilet.

Steve the Pocket:
Hey, maybe the reason they haven't gone public is that they don't want to be stuck doing the bidding of thousands of greedy shareholders, forcing them to ignore product quality and principles in favor of the bottom li--PFFFFFFWAHAHAHAHA. Nope. Couldn't say it with a straight face.

In all seriousness, though, if nothing else, a company that's already making the kind of scratch that Zynga does would have no need for the extra investment capital that going public generates, regardless of what their motivation or business model is, and if the company does care more about producing quality products than making tons of money, going public is a good way to flush that down the toilet.

Of course, since they've hit a stall in their growth, they would be concerned about their future enough to consider-

Wait, did you just imply that their customers actually care about quality in a game? The ones who are paying are basically paying for NICER PIXELS or GETTING NICER PIXELS FASTER. That's pretty much the only thing they're going on besides a simulation that runs with enough competence so that it doesn't stall out due to various glitches...often.

They want to go public so the "shares" that they have given there employes are worth something. They probably all plan to sell there stock as soon as they go public, take the cash and run.

Zynga as a company probably won't exist 2 years after they go public.

 

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