The Death of Zynga

And the birth of all the other companies perfecting Zynga’s pay-to-win games model.

Clash of Clans, left, and FarmVille 2.
Clash of Clans, left, and FarmVille 2, right.

Screenshots via Zynga

The other day, my wife installed a charming, free little game called Disco Zoo on her phone. She made the animals dance around for a while, but then she couldn’t do anything else because she had run out of “Disco Bux.” The options: wait hours for her DiscoBux to replenish, or buy them in packages ranging from 99 cents (for 10 Disco Bux) to $29.95 (for 2,000 Disco Bux). She felt suckered. We have banished Disco Zoo from our house and told it never to darken our door again.

The rise of these games, colloquially called “free to play” (F2P) and “pay to win” (P2W) games, traces back to the original titan of casual gaming, Zynga. Yet Zynga has had a difficult couple of years: Its stock dropped 70 percent from its post-IPO peak in 2012, and founder Mark Pincus was dethroned from his CEO role. After a 36 percent drop in revenue this quarter, Pincus has now been tossed out of his remaining role as chief product officer. As the company attempts a comeback, other F2P makers are improving Zynga’s formula—coming closer to the holy grail, which is to create a game that hooks their users as reliably and totally as cigarettes.

Zynga was once considered a bright star in the gaming firmament. Zynga games like FarmVille were ubiquitous on Facebook. It seemed as though half your friends were asking you to click on their links so that they could improve their farms. Zynga specialized in so-called “energy system” games, in which the ability to play is gated by time. A player may only perform certain game-advancing actions (watering crops, feeding animals, etc.) after a certain amount of time has elapsed, though the player may selectively override this timer through in-app purchases of “energy” (in the form of coins, gems, and the like). Spending money allows players to save their farms from withering, a goal that becomes increasingly difficult as time went on.

Better than any of their competitors, though, Zynga aggressively marketed its games’ ability to allow players to earn “energy” by roping in their friends. Zynga’s “casual games” were inspired by multi-level marketing (MLM) schemes, in which a seller gains prestige and influence in a community by recruiting new sellers into the community and selling product to the new sellers at the next “level.” Zynga’s games encouraged people to recruit their friends to spend time and money on the game, with a “commission” coming to the players through the clicks of those they recruited. Facebook benefited both through the advertising they served to Zynga players as well as through the 30 percent commission they collected on Zynga’s in-app purchases.

Reviled by other gaming companies and pundits alike, Zynga nonetheless made a big splash through sheer profit, at one point contributing an astonishing 19 percent of Facebook’s overall revenues. Their eventual crash looks predictable in retrospect, not because they exploited their users but because they were too exploitative. In FarmVille and clones like CityVille, The Ville, and FrontierVille, the pressure on players to recruit and spend was so great that Zynga milked their users dry too quickly, lacking any sustainable plan for gameplay. Much like a pyramid scheme, Zynga reached a point where users were no longer able to recruit friends nor willing to spend money, at which point they simply dropped out and the structure collapsed. Though Zynga had boosted Facebook’s fortunes from 2009 to 2012, Facebook now viewed Zynga as a parasite instead of a symbiote, cutting off Facebook users from recruiting new players and downranking game notifications.

Casual gaming has now moved primarily to mobile platforms, with less social integration. Games like Candy Crush Saga and Clash of Clans downplay the MLM aspect that Zynga had leveraged. As well they should: The MLM aspect of these games was a bust because MLM can only retain participants long-term by indenturing them via debt, something that Zynga lacked the ability to do (or else they likely would have tried it). Instead, these games primarily rely on the energy system, with in-app purchases advantaging players over their friends, speeding up gameplay, or simply making near-impossible tasks possible. While this still results in some disasters like EA’s mobile Dungeon Keeper (“a cancer that is eroding the market”), wild successes like last year’s Clash of Clans still prove the F2P model to be the most profitable around.

These newer games do not preserve the sheer desperation of Zynga’s early games, in which merely keeping your farm alive required harassing your friends or spending cash or both. In the absence of that desperation, however, quality of actual gameplay becomes more important—and gameplay was always Zynga’s weak link. Zynga’s games weren’t fun so much as compulsive, and the continued marginalization of Pincus suggests that Zynga is trying to communicate to its stockholders that they are trying to put more fun into the mix. (Creativity wasn’t Pincus’ style: “I don’t fucking want innovation,” he memorably said, “just copy [the competitors] and do it until you get their numbers.”) Their newly released and thoroughly monotonous Farmville 2: Country Escape, however, resorts to the same old extortion tactics, even while it downplays the failed MLM model, giving the impression that Zynga is a flailing zombie. For many users the only Zynga game that matters, really, is the one where you play just as much as you can without paying—as Stephen Totilo put it, the “how-to-not-pay-Zynga game.”

Zynga’s legacy lives on, however, in its less ham-fisted successors, who remain intensely focused on behavioral motivators. A game like Supercell’s Clash of Clans offers actual opportunities for strategy, competition, and enjoyment that go beyond the rote machinations of Zynga’s offerings. Aside from deeper gameplay, the games do not immediately go for the financial jugular. The multiplayer Clash of Clans, for example, offers an initial, compelling free combat/strategy experience that hooks users with minimal time delays. Development of your “village” fortress is initially zippy and allows for quick battles against other new players, but as you advance, completion times become increasingly lengthy, and the incentive to spend money—lest you fall behind your opponents or simply want to play more frequently—grows. Virtual Economists gave an in-depth look to Supercell’s wildly successful Clash of Clans, noting the nonlinear ramp-up in progression times as players become more engaged. Getting your Town Hall from Level 1 to Level 2 takes five minutes; from Level 9 to Level 10 takes two weeks.

Even as a purely free experience, however, Clash of Clans never becomes as toxic as Zynga’s offerings, which would kill off your crops and animals if you didn’t pay up. As cigarette makers did, makers of F2P games are carefully titrating their product to achieve the right blend of entertainment, compulsion, and monetary extraction.

Avid Clash of Clans player George Yao estimated that he and the top 100 other players each spend at least $2,000 per month to keep their top rankings on the leaderboards. After six months, Yao burnt out: “Nowadays I can’t even stand opening the app, the sight of it. Looking back, I think I must have been insane.” The makers of Clash of Clans are watching closely to prevent more such burnouts, lest their revenue streams dry up like Zynga’s did. The lesson of Zynga for other F2P companies: Exploit, but don’t exterminate.