How Zynga Plans to Go Mobile

Learn how Zynga is changing its business from a Facebook-dependant model to a pure mobile scheme.

Mar 5, 2014 at 9:00PM

Shares of social gaming company Zynga (NASDAQ:ZNGA) are up almost 50% since early January. Zynga is one of the best-performing tech stocks of 2014 so far, outperforming competitors Glu Mobile (NASDAQ:GLUU) and Electronic Arts by a wide margin.

Although Zynga's shares have outperformed since mid-2013, the situation was very different back in 2012. After reaching its peak in 2012, Zynga's revenue started to decline quickly after the company's most popular game, FarmVille, experienced a massive decrease in users. Investors became aware that the company had little to no exposure to mobile, and that it was too dependent on Facebook's platform to generate revenue. Shares dropped from $14 per share in early 2012 to almost $2 per share by Nov. 2012. However, the company's now in the middle of a turnaround as it tries to change its business to a mobile-focused model. How does Zynga plan to go mobile?


Source: Zynga

The mobile strategy
When Don Mattrick -- who oversaw the Xbox 360 and PC gaming business at Microsoft for six years -- joined Zynga as CEO in mid-2013, he started executing a back-to-basics approach combined with a mobile focus. Instead of pursuing an online gambling license in the U.S. Mattrick focused on developing free-to-play social games, optimized for mobile platforms.

In order to accelerate its mobile strategy, Mattrick decided to acquire mobile gaming studio NaturalMotion for $527 million on Jan. 30. With the acquisition of NaturalMotion, Zynga is getting 12 years of experience in building sophisticated tools for mobile gaming.

New releases
Perhaps we've just started to see the fruits of Zynga's new mobile strategy. On March 3, the company announced it will kick off a soft launch of FarmVille 2: Country Escape. Zynga will also release two updated core titles by the end of March, Zynga Poker and Words With Friends, which will be available for iOS and Android in select markets before the official release, planned for the end of June.

With FarmVille 2: Country Escape, Zynga is betting the farm on mobile devices, as this is the first FarmVille title designed specifically for tablets and smartphones. Zynga is hoping to recapture some of the game's original players, who stopped playing FarmVille when their gaming preferences changed from using Facebook's platform to playing with mobile devices.

It's all about recovering old users
After reaching a peak of more than 310 million monthly average users in the third quarter of 2012, Zynga's user base decreased considerably, as FarmVille gamers left for mobile games like Hay Day, a similar farm simulation game from SuperCell Oy, which recently reported it had doubled revenue to $892 million in 2013. 

Zynga reported 112 million monthly average users in the fourth quarter of 2013, well below its peak. However, a major improvement in user metrics could be in the cards if its mobile games manage to attract previous users. More than a billion people have played Zynga games in the past six years, including 400 million that have played FarmVille.

Beware of Glu Mobile
The road to mobile success is full of challenges. Zynga will have to compete against companies like Glu Mobile that have several years of experience developing games optimized for mobile. A leader of 3-D freemium mobile gaming, Glu recently announced amazing fourth-quarter performance, which was mainly due to the successful release of Deer Hunter 2014, a hunting simulator game that has seen more than 70 million downloads since its release in Oct. 2013.

Final Foolish takeaway
By releasing three major mobile titles only seven months after becoming CEO of Zynga, Don Mattrick is showing us that moving games to mobile continues to be a top priority. The company, which just acquired mobile game studio NaturalMotion in late January, could benefit enormously from recovering old FarmVille users.

A better stock pick for the year ahead
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Adrian Campos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers