Zynga’s Success: Hurting Core Games?

Zynga’s Success: Hurting Core Games?

Zynga’s aspiration to file an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC) has made the social gaming giant the talk of the town. Well, Zynga always seems to be the talk of the town; let’s just say the IPO filing has cranked the volume up to 11.

Zynga’s valuation is rumored to be somewhere in the neighborhood of $15 to $20 billion–more than EA, more than Majesco, more than THQ, more than Ubisoft–and more than Activision, a company that’s been in the business since the dawn of gaming. The scale of Zynga’s success is, frankly, mind-boggling.

When a game company grows as big as Zynga, it’s natural to wonder what kind of effect it’s having on the industry in general. For instance, a visit to any online gaming community will unearth some grumbling about the industry’s social turn. While it’s true that companies like EA, Capcom, and Square-Enix are looking to get deeper into social and mobile game development, has Zynga’s success done any considerable harm to the retail-based core market?

Wedbush Securities’ Michael Pachter doesn’t believe it’s so. “We do not see Zynga’s business as cannibalizing the packaged goods business, at least for hardcore games,” he told Industry Gamers. “We think that Zynga has captured some of the Guitar Hero and Wii Fit crowd—primarily women—and expect the company to continue to grow the games category beyond the traditional 13 – 30 year-old male demographic. However, we do not think that Zynga’s success spells doom or failure for the traditional publishers, as we are confident that the hard core gamer is here to stay.”

It does make more sense to credit Zynga for widening the gaming demographic rather than accusing it of cannibalizing the console and PC market. A gamer who lives by Fallout or Call of Duty or Zelda may dabble in FarmVille or Empires and Allies, but the social gaming experience is simply an extension of the core experience (and one that’s primarily anchored at work), and not a replacement. The boxed core market is in direct competition with digital downloads, game streaming, and, to some extent, the rising free-to-play online core market. Zynga’s influence is minimal, unless you consider the possibility of publishers moving manpower from core projects to social and mobile games.

There is one notable exception, one that Pachter already named: Nintendo. Nintendo attracted a whole new audience to gaming through Wii Sports and Wii Fit. Will that audience hang around for the Wii U, or have they long since moved on to the numberless casual offerings that are available for free on the PC? It certainly explains why Nintendo is so keen on making up with casual gamers with the Wii U.

Whatever your feelings on Zynga, its IPO filing indicates that it’s going to hang around for a while longer. If Pincus’ wild success bothers you, take some solace in the fact that the majority of the core games market isn’t heavily affected by virtual farms, cities, and empires. The core market has its own war to wage, and that primarily has to do with distribution.

About Nadia Oxford
Nadia is a freelance writer living in Toronto. She played her first game at four, decided games were awesome, and has maintained her position since. She writes for 1UP.com, Slide to Play, GamePro and other publications, and is About.com’s Guide to the Nintendo DS.

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