Zynga’s John Schappert Talks Up Opportunities After a Shocking Quarter

In an interview, Zynga’s COO John Schappert said the social games company still has many opportunities on the horizon, despite a shockingly poor earnings report on Wednesday.

Earlier this week, Zynga missed analyst estimates and slashed its 2012 guidance. The company’s excuse? It saw softness among its core games, delayed the launch of The Ville and witnessed an extreme dropoff in Draw Something players.

The bad news sent the newly public company’s stock into a tailspin. Today, it continues trading 70 percent below its offering price, at $3.12 a share.

The series of events also sent the company’s executives into a frenzy, trying to come up with the words that would reassure investors that Zynga has not lost the game — at least not yet.

In the interview Wednesday, Schappert, who left Electronic Arts to join Zynga, emphasized the opportunities lying ahead.

  • On the immediate horizon, he said, the company will get a boost from big Facebook titles coming later this year, including ChefVille, FarmVille 2 and another unannounced ’Ville game. Another near-term project focuses on branching out from the company’s core female demographic, by making “mid-core” game titles.
  • A bit further out, he said, the company has the opportunity to expand beyond Facebook into mobile. While its user base grew 50 percent to 33 million daily active users during the quarter, it has yet to develop games that encourage users to pay to play.
  • And in the long term, he said, the company has an opportunity in real-money gaming. While the prospect of gambling tends to get investors excited, it’s still limited for now to Europe. Plans include launching internationally in the first half of 2013, subject to licensing approval. The company is also working on publishing third-party titles for the Web and mobile.

More from Schappert on those subjects and more:

Mid-core gaming: We saw some success around Empires Vs. Allies with player vs. player. It’s a category that intrigues us, absolutely. It’s a different demographic. We’ll make it social, free and accessible, just like we’ve done with Casino and Arcade. This is a category for male-oriented games, and yes, it will be equal [to Casino and Arcade]. It’s a big emphasis. We haven’t announced timing, but we are actively working on games in that genre.

Villes on mobile: Going forward, the emphasis in mobile is on creating games in higher monetizing genres, like Ville-style games. Casino monetizes well, and you see us doing slots on mobile, but there will also be more Ville-style games coming to mobile. … We do know that Ville-style works well on Web and mobile, and we are actively developing Ville-style games on mobile.

Draw Something’s Q2 dropoff: The game is incredibly successful and is close to 90 million installs. It was a very large contributor in the second quarter, and while the DAUs (daily active users) came down, there’s still a strong connection with its players. A third of the players have played in the past month, and it’s still contributing in a meaningful way, but it didn’t hit expectations and revenue projections.


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