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FarmVille Now Worth More Than EA
tekgoblin writes "Zynga, the creators of the popular hit Facebook game FarmVille, should be happy today as the company's worth has passed that of EA (Electronic Arts)."
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This just shows the power of casual games and social interaction within them, similar to Wii but even better.
I can already see how many posts here will be about how dumb the game is and how only dumb people play it, but I don't think it matters. People like it and the company is making more money than EA. They don't have piracy problems, they have lower development costs and a have HUGE untapped market to gain that will most likely grow a lot more in the future as this all is still so new. But that they already passed the industry giant EA really shows something.
And good for them and the people who play FarmVille and other social games on social networking games. I think it has been over 20 years that we have talked about how to get gaming to be more "normal" and how to get girls to game too - this is it. Let people enjoy the games they like.
Sort of nitpicking but if you click through to the businessweek source article, you'll notice that Zynga Game Network's value is an estimated worth while EA's value is a stock-market value. You should note that the former is estimated by SharesPost Inc. while the latter is determined by the Nasdaq Stock Exchange (in the past year EA has slumped almost 20%).
That's not to say Zynga isn't worth this much, I had a very shocking realization one day as I went to 7 Eleven to pick up some milk. Zynga has partnered with 7 Eleven in selling and marketing FarmVille, Mafia Wars and YoVille items and 'currency.' That's right, like a phone card you can get a prepaid Farmville card at any 7 Eleven (at least in my area) and they were putting free items on Slurpees, Big Gulps, coffee, candy and fast food they sold in the store. So you'd get this little peel off thing giving you a bulletproof vest in Mafia Wars and then it'd tell you how to log in to use it. I bet that alone got a lot more people hooked on Facebook -- just to get to their free item in Zynga's game (and this is why I feel borderline justified to call it a stratagem instead of strategy)!
For sometime now you've been able to buy WoW prepaid cards at 7 Eleven and there's been a handful of Xbox/PS/Wii games behind the counter but when I saw the shelf space and signs devoted to this stuff I knew it was going to dwarf all other forms of gaming very quickly. I know there are plenty of other reasons but when you see something completely outside the realm of where you think you should see a social game (I was going to 7 Eleven to pick up some skim milk), it really hits you right in the face how big this is going to get. Put yourself even spread out across the entire United States with ~10,000 locations of advertising and insertion and you're going to beat anything EA can put out with its billion of dollars. In order to compete with this, EA would have to put a demo disc of four different games targeting different ages for free on the counter of 7 Elevens (like a separate AOL disc for three different consoles and CPU). Despite how relatively inexpensive that would be for them, they aren't going to do that. And that's how Zynga wins out, the illusion that it's 'free' paired with efficient mass distribution of the free concept.
My work here is dung.
"No one ever went broke underestimating the intelligence of the American public." - H.L. Mencken.
Facebook's change of policy could make Zynga worthless overnight. EA on the other hand holds hundreds of IPs, studios etc. These two are not even comparable or in the same league..
I've always felt that one of EA's greatest challenges has been recognizing disruptive technology and capitalizing on it.
This played out numerous times with the PS3 vs. Wii, PSP vs. DS, and especially regarding micro-transactions. There is a producer at EA who, since at least 2005, was not only aware of how important MTX was in Asia, but that we couldn't keep believing that cultural barriers wouldn't keep games on the pay-per-month subscription model forever here in the U.S. I remember going to his brown-bag lunches and saying "Wow, here's a guy who gets it!" But no one took social gaming or micro-transactions seriously back then: it was Sims, Warhammer, Madden, and Pogo. Speaking of, imagine if EA had immediately recognized how powerful a platform Facebook was, and flooded the early app/games scene with MTX versions of Pogo games?
Now we're seeing the advent of Social Gaming 1.0 mixed with these micro-transactions, and already it's been so disruptive that a completely new company with low budget games has surpassed an industry giant that spends tens of millions per title. Why? Because the market has been broadened yet again, far beyond the bounds of the comfort zones most larger companies have established for themselves. EA hasn't ignored this, of course, but they reacted late and with the time-honored response of buying a company that specializes in the area, hoping to get into the market immediately.
Admittedly, the current state of games on Facebook is... I don't know, someone said it was like the Atari days before the big crash. Yet imagine what Social Gaming 2.0 will look like as more high-quality games and free-to-play 3D MMOs start hitting the browsers.
This says more about market analysts and valuation than either company. Remember back when AOL bought Time Warner with essentially monopoly money? Same thing here.
The valuation of something becomes detached from their revenue, assets, long-term prospects, and other things. You get a completely fictional valuation that in a couple of months or years won't be worth a damn. In the mean time, someone will cash out a huge amount of actual dollars, and leave everyone else holding the bag when the value of this stuff becomes worthless.
Unless you're a day trader from the 90s, or were involved in selling Asset Backed Paper Commodities, you should treat this like a temporary blip that has nothing to do with actual money.
Basically, this is equating a fad with no real tangible value with real assets and revenues. Only the suckers buy into this.
Lost at C:>. Found at C.
Which was itself a rip off of Harvest Moon.
I wasn't referring to Zyngas dullness, I was talking about EAs.
Electronic Arts are the main reason what is wrong with gaming industry today. Their attempt to be a Hollywood or the games by using same old crap is unmatched in the gaming industry:
1. Take a money making franchise (Need For Speed, Battlefield, the Sims, all sorts of sport simulations)
2. Make it flashier, update the present day data if there are any (new cars, planes, players) and clog the brand new machines into oblivion
3. ???
4. Profit!
Yes, yes, there are some high quality games in their arsenal (Crysis, System Shock, Mass Effect) - but do they come from EA? Or do they come from some group of talented programmers, still untainted by ridiculous management suggestions, that was later being bought by them?
But most annoying thing is their utmost stupidity then it comes to political correctness. I'm playing a goddamn game, what is wrong with me playing as Taliban?
All Hollywood and no soul.
They're welcome to do so. But, it was major brokerage houses who were betting on the funny money that led to the meltdown of financial markets. Gamble with your own money if you're willing/can afford it -- don't mingle my money in with the monopoly money though.
Having a viable, long-term business model, operations, assets, and profits isn't antiquated. Though, over the last 10-15 years, stock-holders have come to expect unreasonable growth, leading to companies making bad decisions to make the numbers for this quarter match what is expected -- usually at the expense of future results as they gut their operations so they can "improve efficiencies".
So you cut your workforce now, show an improved profit, get your bonuses and run. And, in five years, you no longer have the ability to make product.
Lost at C:>. Found at C.
So does crack cocaine.