Zynga cuts 18% of workforce, shifts focus to mobile. Is it too late?

Zynga CEO Mark Pincus announced today that the gaming company will cut nearly one-fifth of workforce as financial struggles continue (Courtesy: Jim Wilson/The New York Times)

Zynga CEO Mark Pincus announced this week that the gaming company is cutting nearly one-fifth of its workforce as financial struggles continue. (Courtesy: Jim Wilson/The New York Times)

Zynga CEO Mark Pincus announced this week that the gaming company is laying off 18 percent of its workforce. Pincus says the move, which includes cutting 520 positions and closing LA and NYC offices, allows Zynga to reshift its focus to mobile platforms where its players are spending more time.

The scale that served us so well in building and delivering the leading social gaming service on the Web is now making it hard to successfully lead across mobile and multiplatform… Mobile and touch screens are revolutionizing gaming. Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect.

We think it’s a good move for Zynga. Unless you’ve been living under a rock for the past couple of years, you know mobile is growing like wildfire, becoming the backbone by which people consume content.

“Mobile apps are today where social apps were in the maturity phase five years ago,” said Josh Williams, Kontagent’s president and chief science officer. “The moves that Mark and his team made, while painful, are necessary if they are to have a chance at building a dominant mobile app company akin to what they did with Facebook.”  

Yet, 75 percent of business leaders admit to not having a well-defined mobile strategy for 2013. Most of them still consider this new channel as an add-on, retrofitting their Web strategies to fit mobile. That’s really troubling because, as Zynga has shown us, it doesn’t work that way.

Our team of engineers and data scientists work with hundreds of developers who are also faced with the challenge of transitioning from the social Web to mobile. We’ve found that it’s really a different ball game. We know that:

  1. What worked for the Web doesn’t work for mobile.
    You can’t just neatly export your social Web app mechanics to mobile and expect to succeed. What a customer wants to experience on a desktop is very different from what she wants on a mobile device. Responsive design isn’t enough. You’ll have to design the content to the context of the platform.
  2. With native mobile apps, the KPIs are different.
    It’s not just about page views. App developers are masters at seeing how the new KPIs tie together: session lengths; 1-, 3-, 7-day retention; average revenue per user, etc. Many of them are using a solution that has been modeled with these metrics in mind.
  3. Feature releases and A/B testing are a lot more complicated.
    On social, you can push out new updates and features in real time. Then, you can track how your customers are reacting to these changes, segment and iterate immediately. On mobile, the stakes are higher and so are the development nuances. For example, you have to submit changes to the App Store, which could take weeks, and negatively impact engagement rates if your customers aren’t feeling your last updates.
  4. Mobile is app development on steroids.
    We know from our internal research that things move much faster on mobile than they do on social. For example, early user testing on social lasts weeks, even months. Early user testing on mobile can last as little as a few days. Then, there are different stages of the mobile lifecycle you need to understand, as well as when/how to shift to the next stage. Many developers have told us creating apps for mobile is like working in a pressure cooker.
  5. The early indicators for success aren’t the same.
    Kontagent’s data science team has been studying thousands of social and mobile apps to gain insight into industry benchmarks. One question we tried to answer is, ‘What are the early indicators that an app will be successful?’ Surprisingly, the initial signals that a social app will be a big hit can be misleading when applied to mobile. In other words, we’ve seen that mobile apps that show early signs of success—at least when compared to their social-app counterparts—failed in the long-term. (We wonder if perhaps Zynga was led astray by basing the forecast of its mobile games on its social benchmarks.)

“Mobile is a different beast than the social gaming app space that Zynga helped create,” Williams continued. “You have less time to iterate with mobile apps. Mobile is its own space, with its own rules about what works and what doesn’t. It takes strategic focus to create great mobile experiences and this is something that the Zynga team will have to do well—and quickly—if they want to survive.”

Anyway, we’re really excited to share our findings with you in the coming weeks; we hope it will shed some light on why some apps fail while others are wildly successful. Our data science team of super-smart quants is determining how to better predict customer lifetime value (LTV) in mobile.

We’re using this research to model our analytics solution, baking it into the product so it’s easier for you to get those early signals and shift focus as necessary—faster.

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About the author: Catherine Mylinh is a member of Kontagent’s storytelling team, where she is head of PR, brand and content marketing. She is also the editor-in-chief of kScope. In her former life, Catherine was a news anchor for CBS and NBC. She credits her journalism and computer science roots—she was once a programmer!—for her love of learning and writing about all things high tech. You can contact Catherine at @cat_mylinh.

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