Zynga Inc (ZNGA): Big Catch for a Little Device

According to analytics firm App Annie, Zynga Inc (NASDAQ:ZNGA) is the fifth-largest publisher of iOS games, yet it doesn’t crack the top 10 for iOS game revenue. In an industry where gaming revenue equals downloads, multiplied by price per download, Zynga only has half the formula correct. A “lots of eye balls” strategy works only when there are ads or back-end sales to subsidize it – otherwise it falls into the “grow fast, monetize later” category.

How can new CEO Don Mattrick make the mobile strategy work? There’s a solution: make a big catch. But not just any catch. Mattrick needs to hook a blockbuster.

Zynga’s blockbuster catch

If Zynga wants to avoid sinking to the bottom of the ocean it needs to raise revenue quickly. Sales fell 18% last quarter, and in a cost cutting effort, Zynga Inc (NASDAQ:ZNGA) let go of 18% of its work force.

Zynga’s “big winners” lie in mobile gaming. Mr. Mattrick needs to let smaller games die, and direct focus upon the most profitable projects in mobile gaming. It shouldn’t be hard to prioritize – Zynga specializes in metrics-driven game design. The games Farmville and Words with Friends were both blockbusters, but if Zynga Inc (NASDAQ:ZNGA) wants to catch big profits, its needs to throw out its line and hook another winner.

Mobile is the future. If Zynga can capitalize on the blockbuster profit model, the company might find itself needing a bigger boat, perhaps one too big for Fisherman’s Wharf.

The article Zynga: Big Catch for a Little Device originally appeared on Fool.com and is written by Marie Palumbo.

This article was written by Joshua Sauer and edited by Chris Marasco. Chis Marasco is Head Editor of ADifferentAngle. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook Inc (NASDAQ:FB) and Microsoft Corporation (NASDAQ:MSFT). Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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