Zynga Case

While it can be tempting to consider the virtual market as mainly limited to online games, its impact is much bigger and plays a central role in shaping consumer behavior, business models, and major trends in social media platforms. Research indicates that virtual goods contribute $36.9 billion or 37% to the global economy. Zynga is one of many companies that continue to leverage on the virtual market to sell its virtual items. It is the world famous developer of online games using social media platforms such as Facebook to reach 182 million gamers. Marketing virtual goods demands innovativeness, flexibility, and diversification to meet the ever-changing preferences of diverse online users.

Summary of the Case

Being leading online games developer, Zynga was formed in 2007 by Mark Pincus with the help of other entrepreneurs. From the inception until 2012, the company had been a leader in a revolution that brought online games to social media platforms such as Facebook, and in the process, the firm enjoyed supernormal profit. Even though ads generate income for the firm, such popular games as Zynga Slingo, Texas Holdem, Chef Ville, and Farm Ville 2, which attract from 35 to 39 million gamers, account for about 90% of revenue for Zynga. Its marketing strategy is to offer free games targeting a larger and a more casual gaming audience and generate revenue by selling virtual goods and games, and later through exploiting their advertising potential.

Zynga’s online games appeal rather to female clients who are on average 46 and wealthier than other online gamers. It tried to incorporate other social network platforms, such as Google, Yahoo, and iPad and iPhone apps, but it heavily relies on Facebook, which has over 1 billion users and enables the company to reach its 182 active gamers globally. From the onset, Zynga continues to face a difficult time in maintaining investor confidence.

Since 2012, Zynga’s business has been experiencing stiff competition. It has seen the uptake of Zynga’s products decline sharply. The rate of growth of new online gamers is slowing down, and veterans are leaving. The customer base of Zynga is small, and out of 182 million active users, only 5% generate revenue to the company. One of the major flaws of Zynga is the lack of new products, which has seen veteran gamers stop playing Zynga games, and the overreliance on Facebook as a virtual marketing platform. Other factors that have contributed to its poor performance include the lack of new hit games and a high churn rate.

Zynga as an Advertising Platform

Zynga is not a good advertising platform. It is because it has a narrow customer base, mostly women who are on average 46. It is a small audience as compared to overall social media users, who are mostly young people. Zynga can only be attractive to companies, which deal with expensive products for women who are over 40 years. Thus, adverts targeting Zynga gamers should be incorporated into online games in attractive colors to attract the attention of this group of women.

The Use of the Zynga Platform to Develop and Sell Branded Virtual Goods

Firms can capitalize on the Zynga platform to target customers, mostly women, and sell them branded virtual goods. One such way to capture the market niche enjoyed by the company is to offer virtual items that are of better quality than those given by Zynga. Firms should learn from the weakness of the marketing strategy of the latter and offer a wide range of user-friendly virtual goods, which appeal to diverse social media users.

Some of the concerns I have about Zynga is its customer base. Its products appeal to a small group of online users, that is, about 182 million out of one billion Facebook users. The narrow audience base of Zynga will not be good for the sport manufacturing company, the target of which is a wide customer segment, especially the youth who prefer other social platforms, such as Twitter, Instagram, and Snapchat. The second concern I have about Zynga is its overreliance on the Facebook platform, which presents a serious business risk and prevents me from extending the reach of my sports goods campaign.

Inadequate support from Facebook for many of Zynga’s marketing efforts raises the concern whether the former is keen for continued partnership. For instance, it disabled features that enabled Zynga to communicate with its clients directly. Overreliance on the ads platform offered will be a risk because any factors affecting operations of Facebook will automatically affect Zynga. Another concern in relation to Zynga’s strategy to diversify a revenue stream is whether online gambling will succeed. Bearing in mind that the online gambling business using real money is prohibited in the United States of America, it can only be conducted outside it, where there is stiff competition.

The Competitive Situation Facing Zynga

The competition situation facing Zynga is stiff. The company continues to depend on Facebook to market its products and conduct day-to-day operations. The failure to add new games to the list of firm’s goods indicates that the lack of innovativeness. The latter is a critical component for a firm to survive in the online gaming industry. The lack of new products has seen the revenue of the company to decline sharply to an extent of making its shares lose value.

The future of Zynga is full of uncertainty because the supernormal profits the firm was enjoying when it started dealing with online games are in sharp decline coupled with new entrants into the virtual good market who offer online games of better quality. The continued overreliance on Facebook to market its games presents a serious business risk. For the company to remain competitive it should develop new games to suit the ever-evolving needs of its gamers, exploit the marketing potential of other social media platforms, as well as diversify its revenue streamline by offering virtual goods other than online games.