It’s time for true confessions: you play one of those silly Facebook games don’t you? Pick your poison:Farmville, Fishville, Mafi Wars, etc.The company that makes these games, Zynga, currently boasts that they have over 100M users (and that’s just after 2 years). What can they teach the rest of us product managers?
Can A Product Manager Be Too Successful?
The product managers over at Zynga have a little problem on their hands:they are being overwhelmed with success. The company is well on its way to making $835M in revenue this year (note that that’s just $165M away from making one billion dollars!) and their games have over 211 million users each month.
The company hasa very clear goal. It’s founder, Mark Pincus, has stated that he’s in the business of creating an Internet Icon (can you say “Google / Ebay / Amazon / Yahoo”?) but he wants his to be synonymous with fun.
How Do They Make All That Money?
So the big question here is just exactly what is Zynga’s product managers selling? Or maybe a better question is, what aren’t they selling? It turns out that all of their games are available to Facebook users to play for free. Yep, that’s right – they’re pulling in $835M by offering the world free online games.
The way that Zynga makes its money is by having some of its users pay them real money for”virtual goods”. These goods, which vary by game, allow the user to advance a level or can be given to the player’s friends who are also playing the game. Think along the lines of buying that yellow tractor ($3.50) that you’ve always wanted for your farm in Farmville. Oh, and you may as well buy a red one for mom while you are at it since she plays the game also (another $3.50).
Problems In Paradise
Although the products that Zynga’s product managers have rolled out are very successful,there have been issues. One of the secrets to Zynga’s explosive success has to do with the fact that their games were designed to inform all of a player’s friends when the player completed some action. This accomplished two things: it let other Facebook users know that the game existed and it gave the game the apparent stamp of approval from the user who had caused the message to be sent.
You can well imagine just how annoying all of these updates became as more and more people started to play these games. After awhile it became so bad that Facebook had to step in and ended uprestricting the messages. The natural effect of this restriction is that Zynga’s traffic fell sharply.
Bad Ads
Another way that Zynga makes money is by allowing advertisers todisplay ads in their games. They got into trouble awhile back because apparently some of the advertisers who were participating in the program were scam artists who were tricking players into signing up for costly subscription services. Zynga says that they’ve kicked all of these people out of the program now.
When You’re Married, The Wife Is Always Right…
Another challenge that Zynga’s product managers have to deal with is the simple fact that their productslive within the world of Facebook. They need to make sure that Facebook continues to be happy with them in order to ensure that their company can continue to survive and grow.
Recent issues such as a new way to pay for things called”Credits”within the Facebook world which allows Facebook to skim 30% of the proceeds off the top have strained the relationship.
What All Of This Means For You
The world that we live in continues to change at a breathtaking rate. Zynga has shown product managers everywhere that you can give your product away andstill make a lot of money.
By following the80/20 rule (or maybe it’s the 99/1 rule), Zynga has gotten some of their customers to pay for all of their customers to play. Along the way they’ve run into several of the same problems that many startup online companies have encountered.
The product managers at Zynga have to find ways to build on their past successes. Now that other have seen how they’ve done it,competition will be coming quickly. The Zynga product managers had better find a way to create Profitville and do it quickly…!
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: Do you think that Zynga’s product managers should partner with companies besides Facebook?
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What We’ll Be Talking About Next Time
Imagine for a moment that you were inthe business of building walls. Every day you’d get up go build part of a wall and then go home. What if every day when you returned, all of the work that you had done the previous day had been undone? How would you ever get that wall built?