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Zelnick Zings Zynga

| 30 Nov 2011 15:53
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Take-Two CEO Strauss Zelnick says Zynga's metrics are "sketchy" and that disclosure problems are a big part of why it hasn't yet gone public.

It's been a rough week for Zynga. First there was bubbling criticism of the company's corrosive corporate culture and reports of many employees who plan to cash out and jump ship as soon as the company goes public; then came word that Zynga's player numbers have remained essentially flat since the end of 2009, suggesting that the company has hit a wall and has no idea how to get over it. And now the boss of Take-Two Interactive, publisher of franchises like BioShock and Grand Theft Auto, has for some reason decided to slip in a few shots of his own.

"Zynga is a direct marketing company, 97 percent of which don't pay them anything, three percent who do. They churn quite quickly and they get new customers. That is their model," he said yesterday at the Reuters Global Media Summit.

"I would argue being the number one player in [social gaming] is complicated, which is why Zynga hasn't gone public yet because their metrics are sketchy," he continued. "I think they have disclosure issues, I think you are seeing their acquisition costs go up, marketing costs go up and they have very high churn." In order to present a more accurate financial picture to potential investors, Zelnick added, Zynga needs to publish details about its rate of customer loss.

Zynga's IPO has generally been expected to be worth about $1 billion, although the company's recent issues could force that figure down. A Zynga rep had no comment on Zelnick's comments.

Source: Reuters

Disclosure(s): Strauss Zelnick, Chief Executive Officer and Chairman of the Board of Directors of Take-Two Interactive Software, Inc., is the head of ZelnickMedia, an investor in both Take-Two and Defy Media, LLC, our parent company. This article was published without approval or consent of ZelnickMedia or Take-Two.
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