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Zynga shuffle shows Pincus committed to Xbox dream

Tuesday, 2nd July 2013 08:41 GMT By Brenna Hillier

Yeah, yeah – Don Mattrick has left Microsoft. Brenna wants to talk about the flip-side: Mark Pincus has stepped down as CEO of Zynga.

Mark Pincus has given up his position as chief executive officer of Zynga, a company he founded in July 2007 and which was, at one point, considered to be well ahead of the bleeding edge of the games industry and one of the hottest start-ups in tech.

He’s being replaced by Microsoft’s Don Mattrick, the man who guided the Xbox business through its most successful years this generation as head of Microsoft’s Interactive Entertainment division. While this may be surprising to those who would expect Mattrick to ride out his success, there are plenty of reasons for him to move on (so many that he was a rumoured candidate to succeed Riccitiello at EA).

Mattrick seems excited about his new position, and confident enough that he can turn Zynga around that he’s rumoured to have accepted a 95% stock compensation package. Mattrick’s stepping up from a presidential division role to the big chair of a whole company. And Xbox is at the top of its form. There’s very little left for Mattrick to do at Microsoft, but there’s a heck of a lot for him to do at Zynga – and he knows it.

Zynga is a puzzle. Those of you who have always hated Farmville and its ilk will probably never feel comfortable accepting it, but there was a time when Zynga was making big bucks. At a time when the industry, beleaguered by looming digital and generational transitions, was struggling to make ends meet, Zynga found a way to pull in millions of new users. New markets. Untapped consumers. The very things gaming, with its control pads and emphasis on the “hardcore”, most desperately needed.

I’ve argued before that Zynga leaned too heavily on social gaming’s bubble, investing too much and too late in OMGPOP, for example. But whatever the reason it’s perfectly clear that Zynga’s not doing well. Regardless of its cashflow and balance sheets, it’s become toxic stock and that is bad news.

Zynga cheat sheet

Zynga went public in December 2011 with the most lucrative tech IPO since Google. Its stock began diving bare days later.

In the last year, Zynga has made multiple rounds of lay-offs, shuttering whole studios and ending support for titles with strong user-bases.

Some of its more wince-worthy decisions since going public include the acquisition of OMGPop just days before Draw Something’s bubble burst. The developer has since been closed.

Zynga has only recently begun making a profit, but declining user bases have not pleased investors.

The publisher is currently investing heavily in mobile, real money gambling and mid-core development as well as its own web portal. Zynga and Facebook are no longer mutually reliant BFFs.

The company has been sued over allegedly dodgy stock practices as well as over copycat claims, including by EA.

Zynga regularly hosts charity campaigns and is politically active over social justice issues.

Fresh blood is probably just what Zynga needs. This isn’t the first time Zynga has tried to hire its way out of trouble, but this time, Pincus went right to the top, putting his own position on the line in his attempts to woo Mattrick. It really does look like he wooed him, too; AllThingsD reports negotiations for the changeover – which was likely no surprise to Microsoft by the time it went public today – had been underway for quite some time, and in his initial email to Zynga staff, Mattrick references Pincus’s invitation to come run his company for him.

Why would Pincus give up such a role? Because Mattrick can do it better. Mattrick mentioned Pincus’s “vision” in his company-wide memo, and although he didn’t put it so indelicately, we already know what that vision is. Zynga wants to be Xbox Live – but not the Xbox Live of Halo and Call of Duty. The Xbox Live that anybody can and will sign on with; the Xbox Live for the massive market of game-hungry consumers outside the “core”.

Pincus wanted to be the new Mattrick; he even looks a little bit like the man’s younger brother (thank you for that observation, Jessica). He wanted Zynga to do what Xbox Live did – disrupt the industry; introduce a new way of gaming and a new way of being a gamer; create a community and offer content.

He couldn’t do it, though.

Pincus is a smart man. He was a founding investor in Napster, Facebook, Friendster and Twitter. That’s a man who knows the Internet, even before it knows itself. He successfully built up three companies before Zynga, and Zynga itself was worth $1 billion within four years of founding. He is a money maker and a trend-watcher and he knows tech. He was voted CEO of the Year in 2009.

And then, in 2012, he was voted Worst CEO of the Year. The long, slow turn around Zynga has been working towards has not gone down well with investors. Every poor quarterly report only lowers their confidence further. The company has been cutting costs, closing titles and offloading (very unhappy) staff at all levels but there is no reprieve; the people with the money to save Zynga aren’t coming to the rescue. They don’t believe in Pincus.

They believe in Mattrick, though; they believe in him so much that Zynga’s stock spiked sharply as soon as the executive changeover was announced. Mattrick has experience helming the United States’ most successful gaming network. Mattrick was the face of Xbox. Mattrick is money.

I repeat, Pincus is a smart man: whether he has the experience and skill to guide Zynga’s ship into the port he’s envisioned is arguable, but that nobody trusts him to do it is not. By handing off to Mattrick, he’s probably saved his company, the jobs of his many staff, and an interesting experiment in diversifying gaming business and culture which is well worth pursuing. And all it cost was a little dignity and the almost inevitable relinquishment of control which almost all founders experience sooner or later.

Pincus will stay on at Zynga as chief product officer. He was not forced out; with 70% of the Zynga Board’s voting power, he could have stayed on top and driven the publisher into the ground if he chose. Instead, he’s delivered his most ambitious dream right into the hands of the man who can make it come true.

[Image via Wired]

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8 Comments

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  1. Lengendaryboss

    So how long will it be before Dan starts opening his piehole again :)

    Great article Brenna.

    #1 1 year ago
  2. ps3fanboy

    when i read… “Don Mattrick, the man who guided the Xbox business through its most successful years”.. i laughed so hard that i nearly choked on the coffee, LOL :D

    #2 1 year ago
  3. Lengendaryboss

    You drink coffee? Isn’t that for adults :)

    #3 1 year ago
  4. Bam007

    People like ps3fanboy is what’s wrong with gaming and the internet. They are too blind to see everything prior to the one thing which they know them for. I suppose it speaks for itself, but if you look at his track record, he turned the Xbox 360 and Xbox LIVE into what it is today.

    He may not be alone, but it was his call in the end.

    Hate his look, but can’t knock a man for wanting to make a lot of money.

    #4 1 year ago
  5. redwood

    @4 well forgive me for being “diferent” but legendaryboss’s comment was pretty much like ps3fanboy’s comment :)

    this new lynch-mob at vg24/7 is gonna make me quit this site :P

    #5 1 year ago
  6. FeaturePreacher

    Didn’t zynga hire John Schappert from EA after he left Microsoft to watch him eventually leave zynga. I give Mattrick 6 months before he bails after figuring out there’s no way you can prevent a bubble from popping.

    #6 1 year ago
  7. Brenna Hillier

    @6 Schappert stayed for over two years and resigned after he was implicated in a copycat suit over EA’s Sims Social vs The Ville so I’m not sure we can use him as a model in this instance.

    #7 1 year ago
  8. Lengendaryboss

    @5
    I adopted “if you can’t beat em, join em” mentality. Although it not a mentality thats 24/7.

    #8 1 year ago