Getting Back Into the Game: Can This Trio — Chiang, Ko and Cottle — Revive Zynga?
Was it only just over a year ago that Zynga was the hottest game company on the planet?
Today — after seemingly endless executive departures (among the missing in action are the COO, CMO, CFO and the chief creative officer), a falloff in the popularity of its many games on the important Facebook platform, and a perpetually moribund stock price from a $9 billion valuation at its IPO in December of 2011 to $2 billion today — such a moment of glory seems but a very distant memory.
Now, in the wake of the crash, Zynga founder and CEO Mark Pincus is betting his dwindling chips on a trio of lieutenants to make things right: Steve Chiang, who is now president of games; David Ko, Zynga’s former chief mobile officer, who has been promoted to COO; and Barry Cottle, who was named chief revenue officer.
Establishing the three executives’ credibility and skill sets will be instrumental in regaining Wall Street’s confidence in the San Francisco gaming company, and perhaps reestablishing it as a growing and thriving concern.
So, can they do it? To find out, AllThingsD interviewed all three, as well as more than a dozen current and former co-workers of the managers, to get a handle on who they are and what roles they are playing in the company’s turnaround process.
Steve Chiang, president of games:
Chiang, 41, who is now leading all game development, has one of the toughest jobs at the company.
Zynga operates a hits-driven business, and must continue to make compelling games to draw in large audiences, something it has of late struggled to do.
One problem is that it has persisted in churning out its once powerful Ville-style games — FarmVille, CityVille, et al — while its competitors moved on to other genres, such as casino games and action-packed games aimed at males.
Those two new categories, as well as its original Ville genre, which it calls “Invest and Express,” will be at the top of the company’s priority list, in addition to developing across social and mobile.
In this, Chiang’s efforts are critical. But what has made this executive’s path at Zynga unusual was his rise, then fall — and then rise again — within the corporate ranks.
Ahead of the IPO, Zynga was relentless in its efforts to build out a strong bench of C-level executives. One impressive hire was John Schappert, who came on board as chief operating officer to lead the company’s game strategy.
Schappert hailed from Electronic Arts, where he knew Chiang better than anyone else. Together, Chiang and Schappert co-founded Tiburon Entertainment, which was acquired by Electronic Arts in 1998, and continues to be responsible for hit games such as Madden NFL.
Chiang arrived at Zynga first, in March 2010, as EVP of Games. But when Schappert joined Zynga in April 2011, Chiang’s responsibilities naturally decreased as less work was left to go around.
Zynga’s former chief creative officer, Mike Verdu, who worked closely with Chiang, recalled the transition. “There was certainly a period, especially as other executives came in, that the weight of influence shifted away from Steve,” he said. “All of our roles changed a bit when John was there. He had a very different way of doing things, and when he left, there was a realignment of the organization.”
Schappert stepped down in August of 2012, one of the company’s highest-profile departures.
Because Schappert was the front man in the company’s IPO, the shy Chiang is not as well-known, despite having worked there for three years. His resume at the company includes releasing CityVille, which became the biggest game at the time. He also grew the company into a worldwide organization, adding studios across the U.S. and internationally. He pushed the company into new categories, such as arcade-style gaming and hidden objects. Recent credits include the launch of FarmVille 2, the company’s most recent hit.
Chiang spoke briefly and without a lot of actual detail about his time working with Schappert at Zynga. “He’s a personal friend of mine, and he brought a lot to the company, and we made some internal changes and he decided to move on,” he said.
Now, with the reins in Chiang’s hands, he says he will focus on developing games that appeal to a wide audience. To free up talent to work on new projects, the company is sunsetting 13 of its games, including PetVille, Mafia Wars 2 and Indiana Jones Adventure World.
“We’ve had a number of great game makers who have been tied up and now they are focused on new projects,” Chiang said. “We are reducing the number of games we are making, and focusing on fewer with the highest potential in Invest and Express, player versus player, and casino.”
Whether Chiang can pull it off remains to be seen. But one of Chiang’s direct reports — who declined to be named — said: “We aren’t all driven by money or fame. A lot of people are driven by pride. Steve internalizes that. He’s a champion for the game makers, but ultimately, for the players themselves.”
For more on Chiang, click here for an exclusive Q&A interview.
David Ko, chief operations officer:
There’s a long list of reasons why David Ko, 41, earned the promotion to chief operations officer. Over the past two years as chief mobile officer, the former Yahoo exec has overseen the release of 30 mobile games and closed two of Zynga’s largest acquisitions.
The first acquisition was Newtoy, which is known for the very popular Words With Friends mobile game. The second acquisition, of OMGPOP, was less successful. Immediately after Zynga purchased the company for $180 million in cash, its hit product, Draw Something, fell dramatically in the rankings, although it still accounts for the bulk of the company’s mobile users today.
That said, if mobile is critically important to the company’s future, then having Ko as the second in command was a clear message of its importance.
Ko is now second in command, with purview over 3,000 employees, as well as being the public face for the media and Wall Street. On Tuesday, in fact, he will make his first appearance on the company’s fourth-quarter earnings call.
He has a lot to learn, which is why Ko asked everyone to stand up and introduce themselves at a recent meeting of 130 managers. “It was interesting to go around the room and hear from people who had been there for four to five years, or for two months,” he said. “It was a great diversity of talent, and they came from all different backgrounds.”
Ko’s more inclusive management style is likely to be welcomed by employees, especially since Pincus is known for valuing data over people. “Mark [Pincus] misses that stuff at times,” one former employee said. “It’s a mercenary culture; he looked at people as fungible.”
But Ko’s fast ascent to COO is not sudden as it may look, say insiders.
“In spite of the fact that he looks like he is 12, he’s the adult in the room,” said a former co-worker of Ko’s, who knew him from his days at Yahoo. “That’s the irony.”
Prior to Zynga, Ko worked at Yahoo for a decade starting in 2000. He was based initially in Asia, where he ran the Silicon Valley Internet giant’s mobile business. In 2009, Ko then returned Yahoo’s headquarters as the SVP of mobile, but was quickly promoted amid much executive turmoil to be the North American audience head.
Ko said his non-gaming background is a plus, because he has extensive experience monetizing content.
“We have lots of people with all kinds of backgrounds in social or gaming, but what the company needs is about making sure the content is available to everyone and can be monetized in different ways, whether it’s advertising or user pay.” he said. “I have a lot of experience with this. Advertising is becoming a bigger piece of monetizing, and that’s one of my core competencies.”
In his first three months as COO, Ko said, he has made three priorities at the company: To create a sense of discipline, to make the company’s strategies clear and to have fun doing it.
The reality of it all, Ko said, is that he has spent most of his time on the first two: “I have to remind myself at times, we are still a games company. We do have to do some fun things.”
One time the whole company has fun is for an hour every Wednesday when Zynga staffers drop everything they are doing to play a game under development. It was a practice that the company used to do in the early days, and Pincus asked Ko to bring back. After the employees play, they then provide feedback on what they liked and didn’t like about the game.
“Ultimately, we are a games company, and we have to make sure that people find the games fun that we are going to launch,” Ko said.
Barry Cottle, chief revenue officer:
Barry Cottle, 51, is the newest to Zynga of the three top execs, having joined the company in January 2012 as EVP of corporate and business development.
Previously, he was head of EA Interactive, where he oversaw a group the size of Zynga, including the company’s social and mobile gaming divisions and its PopCap unit. As such, his departure was a particularly big blow to EA.
As chief revenue officer at Zynga, Cottle is now responsible for securing partnerships and advertising, plus he is responsible for sales operations and the company’s real-money gaming initiatives.
And also the care and maintenance of Zynga’s most significant relationship — with Facebook.
In November, Zynga and Facebook announced that the two companies had renegotiated their contract, which will make their partnership less complicated. It also provided some benefits to Zynga, such as the ability to launch games first for mobile. Cottle worked directly with Facebook’s Dan Rose on the new terms, unlike the original contract, which was negotiated directly between the two Marks: Mark Zuckerberg and Mark Pincus.
He also moved quickly on the company’s online gambling efforts by setting up a partnership with Bwin in the U.K., which will go live early this year, and also kicked off the years-long process of getting a real-money gaming license in the U.S., starting with Nevada.
The deals are a demonstration of just how eager Cottle is to drum up new revenue wherever he can.
In Cottle’s previous jobs, he had to be equally scrappy. He joined EA in 2007 to manage the company’s roughly $700 million acquisition of Jamdat, a mobile games company. At the time, mobile gaming consisted of developers making Java and Brew games.
But when the iPhone came out, Cottle took on the job of convincing his superiors that smartphones were the future.
One of his former reports at EA recalled that as soon as Cottle made the decision to develop five games for the iPhone’s App Store, “We were in the war room the next day and were moving resources to the iPhone.”
Prior to EA, Cottle co-founded a company called Mobile Digital Media. (The company, which was later renamed Quickoffice, was acquired by Google last year.) The entrepreneurial effort was a spinoff from Cottle’s days at Palm, where he was part of the executive team that took the company public. Earlier in his career, he was a Disney executive for 10 years, working on the company’s TV and Internet services.
In many ways, Cottle’s job at Zynga is similar to the one at EA. But instead of managing the move from feature phone to smartphone, this time he’s transitioning the company from social gaming to mobile gaming.
As part of that, one of Cottle’s biggest challenges will be finding a way for Zynga’s games to be discovered on mobile.
With Facebook, Zynga leveraged virality — friends invited friends to play, or discovered games through their news feeds. But mobile does not have the same dynamics, making distribution much more challenging. Last year, Cottle inked a deal directly with T-Mobile USA, which preloads some of Zynga’s games on to smartphones, and which is actually a throwback to when games were best distributed through the carriers.
Recognizing the pace at which the business is moving, Cottle said, “You have to be able to move fast and adapt and ensure that you bring your consumers with you. They’ll move from platform to platform; we just need to bring our franchises along with them.”
To accomplish this, Cottle has one key strength in his corner: A reputation for working as hard as it takes.
Zynga’s general counsel, Reggie Davis, who has known Cottle since they both worked at Hallmark Cards in Kansas City 25 years ago, said: “He’s Midwest like me. We got taught to show up early and to clean up afterwards — and if you do, you might get asked back. That’s totally Barry.”