After Zynga’s Chartboost acquisition, which left its mark in the first quarter of 2021, Batuhan Avucan, Founder and Managing Director of Mobidictum, had an interview with Zynga’s President of Publishing, Bernard Kim about what to expect from Zynga in 2021.
Batuhan Avucan: Q1 2021 has been the most profitable quarter so far in terms of earnings. What are your comments on that?
Bernard Kim: Q1 had the highest revenue and highest bookings in Zynga’s history, so it is an exciting milestone for the company. Our bookings came in about 720 million dollars, which is 69% year-over-year, across the entire Zynga portfolio. We have been having incredible growth but at the same time, we have had financial discipline as well. As you mentioned, we’ve had a really strong cash flow and strong performance. So, across the board, the business is performing incredibly well. We have also had our best all-time ad revenue in bookings with a number of 123 million dollars for the quarter. And then, we’ve been able to apply more momentum on the financial perspective by increasing our guidance for the full fiscal year by 100 million dollars. So, we are setting the bar higher for the organization. We are really proud of how the company performs and how we deliver moments of surprise and delight, great live services, and great new games from Zynga. We are really excited about the yearly overall performance.
Batuhan Avucan: Right now, the hyper-casual portfolio is bringing a decent amount of revenue. But, do you think IDFA regulations will affect the income in Q2 2021?
Bernard Kim: We actually had winnings with IDFA, and softness with regards to IDFA factored into our forecast for the full fiscal year. There are details about the full fiscal year as well as the Q2 in the guidance given for Q2. We were also able to bring our numbers up, so even with softness related to IDFA, we’re still very bullish on how the categories and Zynga are going to perform in the industry.
Batuhan Avucan: Next question is about the acquisition of Chartboost. Why did Zynga choose to move to Adspace instead of staying in the entertainment industry? Is this decision related to the IDFA changes, if so, why?
Bernard Kim: I think there are two factors. Let’s start with IDFA first, since we talked about it a little bit already. IDFA limits the amount of tracking in third-party applications. If you are a first-party company, for example, Zynga has a portfolio of super-diverse games from social casino to match-3, to racing titles as well as deep hyper-casual experiences. We have one of the most diverse portfolios of games so we can cross-promo within first-party applications. Chartboost’s acquisition will support our company on both the supply and the demand side of the business. What we were really impressed with Chartboost was that they have super sophisticated and deep-engineering teams around building the right technology to continue to grow our ad tech platform. So, we believe that Chartboost is not only going to enhance the way we monetize within our games but also help us expand the audience of Zynga across all of our active users. We will increase our total audience in the market from about 164 million monthly active users to 700 million monthly active users across the expanse of mobile gamers and mobile users.
Batuhan Avucan: This gives an advantage on the managing player base’s ad revenue, right? What is the main competitive advantage that Chartboost gives you?
Bernard Kim: Chartboost will give us a competitive advantage around the addressable market. So, audiences that we can reach every single day are not only experiencing Zynga games but other games as well. What it does for us is to build our ecosystem of the way that we can interact with those players. We already have one of the largest ad inventories and Chartboost is going to help us enhance the monetization of those players that are within our ad network. One of our growth pillars is our vibrant ad business, so the way we can enhance monetizing that network of players that are within our games is super valuable for our growth coming forward. But also on the demand side, Zynga has one of the most aggressive acquisitions of players in the marketplace, spending hundreds of millions of dollars a year in user acquisition. By utilizing an incredible platform like Chartboost, we enhance and optimize our user acquisition in the marketplace. There are multiple different touchpoints of its ecosystem for creating a great game in live service and delivering to players. We are looking to get more parts of that ecosystem and Chartboost is another step to get there.
Batuhan Avucan: I saw in many media outlets that Zynga is becoming a media company as well. What is the vision of that? Can we still say that Zynga is an entertainment company? But now that there is this side of the business, can we see it as an additional part to utilize the player base better?
Bernard Kim: I think people always think of Zynga as an entertainment and games company as you mentioned. Our goal is to deliver moments of surprise and joy into the life of players worldwide. We can say there is a polishing experience to get those experiences to players, so that’s the way we can expand the audience as wide as we can through exciting entertainment experiences for the players. The greater the games we create, the more audience we get. It is like a cycle of a large funnel that brings players in. If they experience great games, then we can continue to create more games and launch newer titles in the marketplace. As we said in the past, we have a Star Wars game coming, we have FarmVille 3, we have Puzzle Combat that has just launched, we have Harry Potter: Puzzles & Spells. We want to build the largest pipeline of players so we can continue to deliver great new games in the marketplace. Rollic also consistently launches new hit games. They released Hair Challenge, which is one of the top games on the marketplace right now. They also have High Heels! and Blob Runner 3D as the number one and number two of the most downloaded games in Q1. So we’re continuing that strong momentum on the hyper-casual side as well as the live service side.
Batuhan Avucan: We would like to congratulate you on the Uncosoft deal. Rollic had successful games with a lot of Turkish studios. So, what made Uncosoft different than any other companies that had hit games with Rollic?
Bernard Kim: Uncosoft is the maker studio behind High Heels!, which is one of our favorite games. I think this is a really symbiotic relationship of teams that work better together and bringing High Heels! in as an actual franchise is just a fantastic thing for the Rollic team. Imagine that not only will High Heels! expand but there could be new games developed by both parties to bring those surprise moments to life.
Batuhan Avucan: I think having a local partner in a country like Turkey gives you the advantage of reaching out and helping with the emerging acquisitions of smaller studios.
Bernard Kim: We have been probably one of the most aggressive companies with regards to acquiring companies based in Turkey. We love the country, we love Istanbul. Every company that has joined Zynga from Turkey has been a really strong culture match. We give the teams a continued autonomy and we experience growing faster together. So, it has been a really strong relationship. And, I think, a lot of them are reference-based. Although the country is massive with regards to its population, the gaming community, as you know, is very small with regards to people topping one another. People joining Zynga think not only if Zynga is the right home but they also do the proper reference tracks—and I think those references speak for themselves since it has been a very positive experience.
Batuhan Avucan: Is there anything else you would like to add to Zynga’s strategies?
Bernard Kim: I can say that we will remain as we are. For the last five years, we have been quite aggressive with mergers and acquisitions and that’s going to continue. This means we are not slowing down even though the company has a tremendous amount of momentum and the market value of Zynga has grown pretty well for the last five years. But this is not the moment for us to slow down. We are at the pace to win and we want to continue to be aggressive not only in our pillars of growth, which are live services and launching new games but also in M&A. Where we see success, we will double down.