The San Francisco-based company makes games for social networks and then profits by selling add-on tools. The popular fantasy farm game FarmVille, for instance, allows players to purchase virtual animals, plants and other items with game cash, which can be bought with real world dollars.
The tiny “micropayments” for farm decorations add up quickly for the VC-backed company, one of the stars in the nascent virtual goods industry.
Industry watchers speculate that Zynga could raise $1 billion to $1.2 billion in an IPO in the near future if it chose to go that route.
But founder and CEO Mark Pincus said at the Reuters Global Media Summit last week that Zynga is not thinking about going public right now and dismissed talk of a buyout.
“We have not had conversations with companies about buying us,” he said.
“The path that makes sense to me today is to go independently, because we don’t need capital and we’re having fun,” he added.
Zynga has raised about $60 million in funding from
Social games attract hundreds of millions of users worldwide. Zynga’s games run on such social networks as Facebook and MySpace, directly from the Web and on mobile devices, such as Apple’s iPhone.
Pincus stressed it’s early in the game for both his company and the industry as a whole. “We don’t think that we would execute better today as a public company,” he said.
He estimated the global virtual goods market currently at about $4 billion and said he expects it to quadruple in the next three to five years.
“Eventually I think more than half of the population of people who are socially connected will participate in social games,” he said.
Industry growing fast
Zynga games get more than a 100 million unique users every month, and the company generates 90% of its revenue by selling those people “virtual goods,” at anywhere from $1 to $20, with most priced from $5 to $10, it says.
Two sources said last month the company’s revenue was coming in at an annual rate above $200 million, and the company, with more than 600 employees, is continuing to grow rapidly.
Another large social gaming company, London-based
“We would have loved to buy Playfish, we really admire them… maybe if we were public we would have been able to merge some way with them,” Pincus said.
He said that Zynga would likely make small acquisitions each quarter to help it bring talent in.
“We have 300 open positions that we haven’t been able to fill, or as they fill new ones open.” —David Lawsky and Gabriel Madway, Reuters