Zynga recently announced its financial results for the third quarter of 2021. Subsequently, we spoke with Bernard Kim, President of Publishing of Zynga, about the company’s recent achievements and future plans.
Mobidictum Founder and Managing Director Batuhan Avucan raised some questions about Bernard Kim’s thoughts on Q3 financial results, the FarmVille 3 launch, the announcement of Disco Loco 3D, and Zynga’s mission for the future.
The San Francisco-based Zynga’s revenue for Q3 was $705 million, up 40% year-over-year; and bookings of $668 million, up 6% year-over-year. In after-hours trading, Zynga’s stock price is up 6% to $7.41 a share. In 2021, Zynga expects to deliver revenue of $2.78 billion, up 41% from a year earlier, and bookings of $2.814 billion, compared to expectations of $2.807 billion in bookings. It expects a net increase in deferred revenue of $34 million, down 88%, from a year earlier.
Details of the exclusive interview
Batuhan Avucan: Let’s start with the Q3 results and the latest games that you released.
Bernard Kim: Our Q3 results came in ahead of guidance. It’s our highest ever Q3 revenue, as well as bookings. Our revenue came in at $705 million, 40% year-over-year; bookings came in 668 million, 6% year-over-year, and the EBITDA was $197 million. So, this is an incredible performance, improvement, and profitability from the team. We feel really great about our performance and our continued execution in our multi-year growth strategy. The pillars of this growth center around operating and growing live services, launching fantastic new games, and exciting M&A in Turkey. And the fourth pillar is our 10X ideas, new platforms, and exploring new monetization paths.
Batuhan Avucan: For Q3, obviously, you have a lot of big news, but I think the one that stands out is FarmVille 3 since it’s the third game of the franchise. What makes FarmVille 3 different than the previous two games? What are your expectations from this title?
Bernard Kim: I think our goal for FarmVille 3 is to build it into a “forever franchise”, a game that people will enjoy playing for years of their life and will generate over $100 million of bookings a year for Zynga. We have just released the title and we’re really excited about its performance. User reviews are already at 4.6 and above. We were able to scale the game in the top free charts; #1 on iPad, #2 on iPhone. Right now it’s still in the top five in the free charts, which is pretty amazing considering how many hyper-casual games are launching every single day.
When it comes to what differentiates this FarmVille, we dove deep into cooperative & social gameplay, customization, and animal breeding. So when you play the game, you start building connections with farmhands that take care of your farm, and enhancing and upgrading your farmland. Then, there are really incredible farm animals, exotic pets which can go and do exciting missions for you as a player. So, we believe that the game is a great blend of all of these.
Batuhan Avucan: So, FarmVille is under the casual category, let’s say hyper-casual games are also in the same category. If you dominate the top three positions as Zynga, would it matter to have FarmVille on #1, and a hyper-casual game on #2?
Bernard Kim: We don’t really pick favorites. There’s enough room on the number of downloads that are happening worldwide on mobile to make room for enough hyper-casual games as well as invest-and-express games. We knew that hyper-casual games had the capability to dominate the free charts for a long time. We could either ignore it or we could participate in this. In this case, we spent lots and lots of years actually analyzing the space, deciding if we should build or buy.
We have teams working on hyper-casual, but we ended up searching for the right company for a very long time and then found Rollic at the right time. So we’re very excited that Burak and the Rollic team are part of Zynga. We now have a lot of free top-charting games in the marketplace. I think they’ve had 16 titles now that have either become #1 or #2 on the top charts.
Batuhan Avucan: Let’s move on with Disco Loco 3D. I believe you definitely caught a great opportunity with Disco Loco 3D since TikTok is the rising star of social media. What are your overall comments on the game? How did the idea come out, and how fast did you iterate this game into the market?
Bernard Kim: Disco Loco is the first game to launch on TikTok by a studio partner. When it comes to Zynga, our founding mission is connecting the world through games. So we want to be the first or one of the leading game publishers on emerging platforms. And I’d say that TikTok at this point has fully emerged. They are one of the leading global social platforms. I know my kids spend a tremendous amount of time on TikTok every single day, and we want to bring gaming experiences directly to the platforms where people and gamers are engaging. So one thing that we’ve seen is TikTok has become a very viable user acquisition platform for Zynga, especially with the Rollic games. We want to figure out ways to bring the gaming experience directly to the platform. So we’re really excited to see bringing this level of fun into TikTok audiences.
Batuhan Avucan: Zynga has recently appointed Matt Wolf as the Vice President of Blockchain Gaming which means you’re definitely focusing on the blockchain and being an early adapter. How does the management come up with fast decisions to catch the global trends?
Bernard Kim: The decision wasn’t made that quickly. When it comes to NFT & blockchain gaming, we’ve been having skunkworks teams explore this space, and engineers look at it. We’re passionate about the disruption as well as where we see the future of gaming where gamers engage both play-to-win alternative billing models. All of those interesting cross-sections, I think, are perfect for what Zynga has from an infrastructure perspective. Because we have huge intellectual property, we have a tremendous amount of analytics engineers services across operating game services over the last 15 years. When it came to “Should we build?”, “Should we buy?”, “Should we organically grow this business?” we thought that the right thing would be to have the right leader at the top of it.
Matt is someone we have known for a very long time, and we were really excited to recruit him. And we’re really pumped now that he’s decided to join Zynga and actually give up his own company to do that. So, he’s going to be leading the initiative for Zynga. I feel like we have done a lot of research in this space; we are moving quickly when it comes to putting a stake in the ground, building a team, hiring leadership to go after NFTs and blockchain gaming.
Batuhan Avucan: Cross-platform play is essential for you, but you depreciate your web-based games, will you come back to this platform in the future?
Bernard Kim: When you traditionally think of web-based games, you might be thinking of a Steam game or something that is on a direct website. We’re talking more about the depreciation of an older business for Zynga, which is like FarmVille 1 on Facebook. So, when it comes to our future, we’re very bullish on cross-platform gaming. For example, Star Wars Hunters launches soon in soft launch. That’s going to be full cross-platform gameplay. Ideally, when we launch the game next year, it will be playable on Android, iOS, and also on Nintendo Switch. For the future, we are going to be building experience not only on mobile but on PC, and potentially on console as well. We want to be where gamers are.