Zynga Spends 300 Dollars for Each New Paying Player
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The money spent in marketing doesn’t even out for Zynga’s bottom line.
Social gaming giant and all-round gaming industry controversy center Zynga spends approximately $300 in marketing in order to gain every new paying customer. When the average paying customer only shells out $150 during their time playing Zynga games, the math doesn’t look good.
Arvind Bhatia, an interactive entertainment analyst with Sterne Agee, told financial analyst site Benzinga:
“That’s our math; that’s not what the company says. They’ve given us the sales in marketing dollars for the first nine months – $120 million. Almost all of that is for acquiring customers. We also know that they had 3.4 million unique payers in the September quarter, which is up from 3 million at the end of December 2010. In other words, they added 400,000 additional payers and they spent $120 million to acquire them.”
Naturally, those marketing dollars spent will have attracted many hundreds of thousands – maybe millions – of new players who won’t be paying any money, yet. It can take a long time to convert a free-to-play gamer into a paying customer who wants to unlock the premium content on offer. However, Bhatia’s math suggests that twice as many paying customers would be needed to cover the costs.
So it seems that Zynga is willing to keep spending vast amounts of money in order to keep attracting new players –and particularly payers – into the fold. Even if the return on investment doesn’t add up, the Zynga seems desperate to combat the impression that its star is waning along with player interest.
Yet, the reality is a stark one. Zynga’s star is indeed fading, as its stock market share price wilted 10% just 2 days after the stock was floated. It’s now holding steady at a little over $9 per share.
Zynga’s golden days of attracting millions of new players for months on end are over. The more sedate pace of growth of Zynga’s newer games such as Mafia Wars, Adventure World and CastleVille has failed to spark the same kind of interest that exploded during the peak years of Farmville/CityVille.
It’s difficult to tell if the waning player numbers are due to a kind of general apathy encroaching on Zynga games, or whether it’s because the slew of new titles that they’ve created have been pushed too aggressively. Any gamer, from the casual player to the most hardcore, only has a limited amount of time to play. Therefore, they will only invest their time in one or a limited handful of game titles at any given time.
Zynga’s desire to replace record-breakers like FarmVille with new hit titles is understandable as it has tried strenuously to keep its millions of fans interested. However, Zynga may well have flooded their userbase with too many options. It’s becoming harder and harder for their new titles to gain traction as they create a lot of buzz initially but then peak after only a few weeks.
While many industry experts are already sounding the death knell for Zynga, this may be a touch premature, as the company still have millions of devoted, paying gamers. Ongoing changes in online gambling law has also made Zynga prick up its ears in anticipation, as it has already cut its teeth in this area with Zynga Poker.
Will the cutesy cartoon characters of Zynga’s art style make the pain of losing a fortune to online gambling any easier? Only time and tide will tell!
