Zynga's S-1

[pvarangot]

From the risks section:

We rely on a small percentage of our players for nearly all of our revenue.

A small percentage of our players account for nearly all of our revenue. We lose paying players in the ordinary course of business. In order to sustain our revenue levels, we must attract new paying players or increase the amount our players pay. To retain paying players, we must devote significant resources so that the games they play retain their interest and attract them to our other games. If we fail to grow or sustain the number of our paying players, or if the rate at which we add paying players declines or if the average amount our paying players pay declines, our business may not grow, our financial results will suffer, and our stock price may decline.

Is this normal in the social games industry?

[patio11]

Yes. It is the dirty not-so-secret that convinced me not to go into them. It is also true of nearly all "Free 2 Play" games, including ones off FB.

[staunch]

It's normal in any "freemium" business.

[hugh3]

I realise that it's mandated by law, but... damn that's some refreshing honesty. I feel cleansed just by reading it.

[c2]

This seems night and day to GroupOn's S-1. A solid sustainable business, plenty of cash on hand which is growing every quarter, and a clear path forward to continue their phenomenal growth.

There are plenty of risks of course, not the least of which is Facebook turning off the lights, but that is something that seems like it could be baked into the IPO price for a 1 billion dollar company with these financials.

Not saying I will invest in few months after the IPO, generally it takes time for investor hype to cool down and heat back up again (see LinkedIn, the only people who made any money so far were the investment banks) - but it might be a good post-IPO lull buy.

[fourspace]

The funniest part is that Zynga has made a solid business selling virtual goods, while Groupon has built a crap business selling the real thing.

[swalkergibson]

This looks like the most promising IPO yet. They are sitting on a pile of cash, they have a healthy profit margin, and it seems like they are the undisputed market leader in a growing industry segment.

Question, how does the IPO price get set? Is it in the S-1 and I just missed it, or does that come out later?

[portman]

It comes later, in the weeks leading up to the actual offering.

[suking]

Supply & demand during road show - the IB running it will price it, sometimes the day before a la LNKD.

[jkincaid]

My concern about Zynga is that they're going to burn through users.

People will pay for things in a game and have fun doing it. Then they'll get sick of that game and move on to the next one. And they'll buy more things there, and then they'll get sick of that game and look at the next one and realize that, hey, this one is pretty similar. And maybe it isn't worth investing hours upon hours tending to some sprites. Or forking over real money.

I'm not saying this is guaranteed, but as someone who has played a lot of games growing up, I had it happen plenty of times. Zynga needs to release some games that feel totally different from Farm/City/Frontierville.

[j79]

I know they're famous for Farm/City/Frontierville, but they seem to have done a good job acquiring popular games/studios (i.e. Words with Friends..)

And while I haven't played it yet, I've heard that "Hanging with Friends" is a lot of fun as well (which is the result of them acquiring NewToy when they got Words...)

Personally, It's nice to see Zynga attempting to keep "fresh" and not sticking with just the *villes. However, I do think that increased competition (for instance, on the iPhone Zynga Poker pales compared to Pokerist.com's Texas Poker) will make it interesting for Zynga.

[timr]

I found this tidbit amazing:

"As of March 31, 2011, approximately 64% of our employees had been with us for less than one year and approximately 92% for less than two years."

For a company with hundreds of employees, that's a crazy growth rate.

[rdl]

A lot of their growth is through acquisitions, so it's a little bit less crazy (the teams are intact and probably worked together for a bit before), but still crazy.

[owenmarshall]

... and it's a whale of a risk.

Of course, for right now, Facebook and Zynga work well together. But what happens to Zynga when Facebook decides to get into games?

[pvarangot]

Only one in page 14, RISK FACTORS section ends in page 32.

[ritonlajoie]

I have a question which could seem very amateurish but: how do I buy Zinga when it's out ? Is there a way to actually place orders before the opening?

[starnix17]

Not really an important question, but why didn't they specify a symbol?

[breck]

Wow, how did Brad Feld acquire 30 million shares?