Mark Pincus on Zynga’s Strategy: Open Platform, Collect Non-Gamers, Score One Billion Players

In the run-up to its IPO, Zynga spent most of last year in a quiet period unable to talk about its plans.

Now that’s over, and founder and CEO Mark Pincus has been on roll. In June, he appeared at the D: All Things Digital conference. Later the same month, he hosted a press event at Zynga’s San Francisco headquarters, and earlier this week he was the keynote speaker at the GamesBeat conference.

In an interview with AllThingsD, Pincus explained why he’s got so much to say. “We are happy to be able to talk now, and excited to share our message,” he said.

As the largest social games company, Zynga has a lot going for it, but without clarity on how it will achieve its next phase of growth, investors are playing it safe.

Yesterday, Zynga’s shares plunged in early trading to $4.78 a share, representing an all-time low. Earlier that morning, Pacific Crest analyst Evan Wilson cut his second-quarter estimates, saying he believes fewer people are playing Zynga’s games than he had originally anticipated. By the end of the day, the stock regained some ground to close at $5.02 a share, which is still down 50 percent from its IPO price in December.

But now with no restrictions in place, Pincus is excited to talk about the company’s upcoming slate of games on Facebook, including two new Ville franchises, and how Zynga will continue targeting a very large audience of people who have never considered themselves gamers.

He’s also bullish on mobile, which he says is just starting to reach the scale that Zynga looks for in a platform. He defines sufficient scale as the ability to reach 10 million users in the first 90 days. And, finally, Pincus is eager to gab about the huge opportunity for Zynga to open up its platform and make its internal tools and infrastructure available to third-party game developers.

Here’s an edited version of our conversation:

Growing the gaming pie:

Our goal is to convince people who have never played games before to play because it’s social, easy and free. It’s not about going after a mature market, or people who are hardcore gamers. We will know we’ve gotten our games right when we help to grow the market. CityVille grew the market — the entire ecosystem — by 18 percent [according to daily active users tracked by AppData.] We hope Bubble Safari, The Ville and ChefVille bring in new people, too.

On opening up its network to other developers:

Pincus: We are optimists about the future, and believe there is a bigger opportunity if we all work together rather than being isolationists and not interconnecting. We use a term called “social liquidity.” It’s when you come to our game, or the next great Angry Birds, and you find it’s really easy to get your friends playing the game, too. We are fundamentally a growth company. Our vision is to have a billion people playing games together. [Based on the most recent numbers available, Zynga reaches 292 million people.]

On leveraging Zynga’s investments in infrastructure:

We do see an opportunity to provide infrastructure that we’ve developed to the rest of the industry, but not in a commodity-like way, like hosting and scalablity. Amazon’s AWS does that. I don’t want to underemphasize our infrastructure, though — it has led us to scale much more efficiently through a combination of data centers and software. We have been able to reduce the servers required by 90 percent. Bubble Safari would have taken 2,000 servers a year ago, and we use 200 servers today. That is real innovation that dramatically reduced, not just our capital and operating expenses, but also the amount of server engineering. It cuts the amount of engineering in half.

We’ve also created some important technology that we can make available to the industry, but beyond that, the games that are on our platform can be more social. All of our analytics are geared toward helping a product manager and engineer figure out what features drive more social. We track Active Social Network, or ASN, which is the number of people who you interact with during a given period of time.

That’s been the most important metric as we make our games more social. As we move it [ASN], our retention and revenues go up.

On becoming a publisher for third-party titles:

I think that if we can interconnect our games and audiences with each other then we have a massive opportunity as an industry to drive more network effects at much bigger scale for combined players. And through that drive, we can increase game discovery and create higher retention and revenues, especially as I look at mobile. My view — unlike other companies, like Gree, which see this as a winner-take-all situation — I don’t believe that’s how mobile is going to evolve.

I believe mobile will be much broader and fragmented and open than that. I think that there’s potential for networks to emerge for developers that will drive discovery and engagement and player experiences. Mobile is going to play out much more, and will be more about the industry collaborating and connecting than a single player owning an opportunity. We want to be an important part of that.

On why it is not winner-take-all:

Everything about mobile is fragmented, like the desktop used to be. Mobile games today and apps spread more by word of mouth offline than online. I think that when you think about the mobile user experience from the end-user point of view, it’s a throwback to the desktop experience. It’s a mission-oriented and destination-oriented experience. You aren’t starting with an open search bar, or even an App Store, normally. You are starting by looking at your desktop, and you are going into one of the apps. It’s a decentralized experience. Maybe Apple, Facebook or Google will centralize that experience, but it’s looking like it will continue to evolve as a decentralized experience, which is much more fragmented.

On why developers will want to work with Zynga, which is also a competitor:

I think that any large consumer app or network has an opportunity to open up its APIs to curate or publish great work. The developers will decide if: a) they see short-term value, or b) it is a long-term valuable relationship. Over time, you’ll have to deliver a win-win that’s consistent, valuable, transparent and reliable. We want to do that. We aren’t the first game network to have third-party developers. We aren’t in it for the next four quarters. We are in it for the next four decades. We want to get it right and be in the market soon, but we want to figure out how to help the ecosystem and be a reliable partner.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work