(Image source: San Francisco Chronicle)
BY TRACY PFEIFFER
ANCHOR AUSTIN KIM
You're watching multisource business news analysis from Newsy.
If you haven’t actually played one of their games -- you probably have seen a little brown cow lost on a friend’s Facebook wall.
Online gaming company Zynga - responsible for titles like Farmville, Mafia Wars, and Cityville - is going public.
KATE KELLY, CNBC:“They’re looking at a $1 billion offering at a minimum. That of course can change as they go through the SEC process. …The company has generated positive operating cash flow since 2007. The proceeds, interestingly, could be used for corporate purposes, possibly acquisitions, but also philanthropy. You don’t see that every day.”
Zynga’s games - like Cityville, seen here - are free to play -- so the company makes money off of advertisements as well as more “dedicated” users - who can opt to purchase special items or upgrades to enhance or speed up game-play. (Zynga/IGN)
And just how many users do they have? According to the company’s CEO, besides 148 million unique monthly users in 166 countries...
“...our users typically play more than one of our games each month, [and] they account for 232 million monthly active users. Our players create and store more than 38,000 virtual items every second and spend 2 billion minutes a day with our service...” (The Economic Times)
Zynga is reportedly looking for a valuation of $20 billion. And analysts say -- besides their users -- their money-making ability could go a long way to reach that number. Here’s Bloomberg.
CORY JOHNSON, BLOOMBERG: “The revenues in this thing are just a beast. If you look at the quarterly revenue figures, you see this company growing and growing and growing from 101 million bucks five quarters ago to 235 million in the quarter that ended in March. Not only are the revenues growing, but the pace of that growth is actually increasing.”
The caveat -- Zynga’s heavy dependence on Facebook.
The company mentioned the issue in their filing -- and an analyst for The Wall Street Journal says, Facebook could make or break Zynga.
NICK WINGFIELD: “They’ve tried to diversify to get into mobile games as well, and some of the acquisitions they’ve made have helped push them in that direction, but they still really have not had big successes off Facebook. …The problem is that they’re at the mercy of Facebook’s policies, including any changes they make, and how they can market their game, and that’s impacted their business in the past.”
Facebook takes a 30 percent cut off of the money players spend in Zynga’s games.
But a writer for Forbes says -- barring Facebook creating its own games -- the two companies will likely remain quote- “frenemies” -- because they’re both making money.
“Assuming 95% of Zynga’s revenues are generated on the Facebook platform … it would be safe to assume Facebook will make $400 million off Zynga alone this year - barely lifting a finger.”
According to Bloomberg, Zynga processes more than one petabyte of content daily -- that’s more than 1,000 terabytes.
Follow @Newsy_Videos on Twitter
Get more multisource video news analysis from Newsy.
Transcript by Newsy
 |  |  |  |
