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Zynga, Maker of Farmville, Files for $1 Billion IPO
Posted By Joshua Condon On July 6, 2011 @ 11:26 am In Gaming,Internet and Online Business | 2 Comments
Game developer Zynga , responsible for popular titles Farmville, Cityville, and Words With Friends, filed to raise up to $1 billion in an initial public offering, according to SEC documents.
The company’s popularity is undeniable–Zynga counts 60 million daily active users spending a total of 2 billion minutes per day playing its various games–though popularity and profitability do not necessarily go hand-in-hand.
Zynga, though, is also quite profitable according to filing documents, racking up $90.6 million in profit in 2010 (on sales totaling $597 million) and another $11.8 million in the first quarter of 2011. Much of the financial success of games such as Farmville and Cityville is attributed to users paying real money for virtual items within the games. Zynga says it counts on this “small percentage of our players for nearly all of our revenue,” though it also courts unique advertising deals with companies such as Starbucks, which paid to place virtual franchises within the Cityville platform.
Zynga remains closely tied with Facebook, the platform within which its earliest games became immensely popular, saying in the SEC documents that Facebook remains its “primary distribution, marketing, promotion and payment platform.” The two companies have a contract through 2015 governing Zynga’s terms of service, which requires Zynga to use the Facebook Credits internal currency as its primary payment system. Under the agreement, Facebook collects 30 percent of every transaction.
Read more at CNN Money .
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URL to article: http://technology.inc.com/2011/07/06/zynga-maker-of-farmville-files-for-1-billion-ipo/
URLs in this post:
 Zynga: http://www.zynga.com/
 CNN Money: http://money.cnn.com/2011/07/01/technology/zynga_IPO/index.htm
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