It goes without saying that troubled gaming company Zynga needs to be taken private again. But to secure the long-term viability of the business, what else does Mark Pincus need to do, asks Milo Yiannopoulos.
I was interviewed last year at length for a provocative book about addiction, called The Fix. In it, Daily Telegraph journalist Damian Thompson explains why online social gaming is the new gambling. (The chapter in question was serialised by The Kernel, so you can read it online free of charge. But do buy the book.)
Consumers would be surprised, I think, to learn just how much of the success of companies like Zynga is down to the gambling industry. Because while you might imagine that the company’s San Francisco design district offices are packed to the gills with brogrammers and badly-dressed executives enjoying extended pubescence, in fact the company’s star turns are very conventional psychologists turned engineers, nicked from the casinos and slot machine arcades of Las Vegas.
That’s why the company has been so successful: its genius can be found not in the glossiness of the apps it creates, but in their unprecedented ability to toy with brain chemistry, peppering dopamine hits into players’ brains to manipulate their moods. And if that sounds like science fiction, consider that the food industry has been doing precisely this for decades, tampering with flavour in order to create the precise quantities of fat, salt and sugar that will keep hapless fatties coming back.
Zynga’s games are a lot more like slot machines than they are the standalone console games that preceded them. Furiously A/B tested like their Angry Birds cousins to ensure maximum addictiveness, euphemistically called “stickiness” by the gaming industry, these deceptively simplistic pastimes are engineered to do one thing: keep players hooked for long enough to show them ads or sell them things – often, things that don’t even exist.
For a time, Zynga was terrifyingly brilliant at achieving that goal, scooping up hundreds of millions of users for its asinine farming games, flogging “virtual goods” to bored Wisconsin housewives and skyrocketing to fame and flotation. But times change, and now the house is losing: Zynga’s preposterous $180 million acquisition of Draw Something developer OMGPOP, hailed at the time as a smart way to acquire hundreds of millions of active users, may come to be seen as the beginning of the end. In gambling parlance, Zynga went all in, and lost.
The company is thus retreating into what its developers know best, telling journalists that “real money” games are on the way in 2013. It’s just as well and it’s not a moment too soon: Zynga has always been in the business of selling mood enhancement to the masses, but now it is realising that the volatility of the mobile gaming space is not the way to sell chance in the longer term. Who better to come up with the iconic digital reinvention of the roulette wheel or the blackjack table than Zynga?
There are a lot of caveats. The company must perform some urgent remedial work if it is to stay afloat, not least with its own employees, who are famously miserable and maltreated – those who are still at the company, that is. But the challenge on which its executive must focus will be to successfully execute one last, audacious bet, and turn this casino masquerading as a gaming company into the Nevada desert of the internet.
Because here’s the bottom line: Zynga must turn its back on virtual goods if it wishes to build a sustainable, high-growth company, particularly if it wishes to remain listed, and instead start shipping compelling gambling experiences. The odds against pulling off another Farmville (and one after that, and one after that) are too high, and Wall Street isn’t prepared to bet on success in such a fractured and unpredictable landscape.
Zynga’s chief executive famously likes to think big – so how’s this for a disruptive idea: why not throw out the short-term, get rich quick psychology of viral mobile games with their $0.99 upsells and instead concentrate on making the entire city of Las Vegas obsolete? That might sound absurdly hubristic, but it’s looking like the only way Pincus can now save a company valued by the markets at less than the cash it has on hand.
Your move, Mr Pincus.