Monday, July 04, 2011
35 cents of profit per player per year
Zynga is planning to offer $1 billion of shares. To do so, they had to file a lot of information about their business with the SEC. SEC filings are always interesting, because companies have to be very truthful in them. One highlight I noticed was that in 2010 Zynga made $90.6 million of profit. From 262 million of players. That is just under 35 cents per player per year.
Also interesting is Zynga's profit margin: The $90.6 million net income stem from nearly $600 million of revenue, a profit margin of 15%. Compare that to Blizzard's 50% profit margin that World of Warcraft makes, about $500 million of profit from $1 billion of revenue and 11.4 million players. Blizzard makes over 100 times more profit per player per year.
I think the news of the death of the MMORPG in favor of the Facebook game are greatly exaggerated. You might argue that Blizzard isn't the typical MMORPG company, but then Zynga isn't the typical Facebook game company either. Both companies are miles ahead of their competitors, the second biggest Facebook company has 33 million players. Comparing the best in class in both fields is quite valid.
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