AUG. 11, 2011 • In a regulatory disclosure, Zynga reported that only 5% of its 232 million average monthly active users purchase virtual items. Zynga reported revenue of $242.8 million for the quarter ending March 31. For the period, Zynga said its top games accounted for 63% of revenue. The company filed July 1 for an initial public offering of up to $1 billion.
Impact: At first glance many expected Zynga’s percentage of paying customers to be higher, and were disappointed. The picture looks a lot brighter when viewed from an annual context. The online game business, represented by services such as subscription MMOs, and gaming on social networks like Facebook, exhibits revenue generation that is typically less seasonal than retail games. From that perspective, Zynga’s Q1 disclosure puts the company on a full calendar year of revenues at around $1 billion. While this doesn’t justify Facebook-like valuations, it certainly gives credence to the some multibillion dollar values in the context of the latest IPOs by other social networks like LinkedIn.
