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Zynga's Estimated Value Surpasses Electronic Arts

Strategic Insights

— 1 min read

Zynga Game Network Inc., the creator of FarmVille and FrontierVille, has seen its estimated value exceed that of Electronic Arts Inc.'s stock-market value, marking a significant shift in the gaming industry towards social-networking entertainment. This valuation milestone is attributed to Zynga's rapid growth and its successful use of Facebook's social network to distribute games, generating significant revenue from the sale of virtual goods. As one of the fastest-growing technology firms, Zynga has become a leading player in the gaming industry, surpassing Electronic Arts, which faces declining retail sales and is seeking acquisitions for growth.

Key Takeaways:

  • Zynga's estimated value is $5.51 billion, surpassing Electronic Arts' market value of $5.16 billion.
  • Zynga has become one of the fastest-growing technology firms, using Facebook's social network to distribute games and generate revenue from virtual goods.
  • The company has grabbed about a third of the virtual goods market, worth $1.6 billion this year, according to research firm Inside Network.
  • Zynga has made six acquisitions since May and expanded its workforce by a third in the past quarter to 1,200 staff.
  • To reduce its dependence on Facebook, which is taking a bigger cut of virtual-goods sales, Zynga has developed its own websites for games and put its apps on sites run by Microsoft Corp. and Yahoo! Inc.
  • Zynga has introduced games in new markets, including Hong Kong and Taiwan, and has made acquisitions in China and Japan.

Statistics:

  • Zynga's estimated value: $5.51 billion
  • Electronic Arts' market value: $5.16 billion
  • Size of the virtual goods market: $1.6 billion (this year)
  • Zynga's workforce growth: expanded by a third in the past quarter to 1,200 staff
  • Twitter followers: 210 million monthly active users on Facebook
  • Acquisitions made by Zynga since May: six
  • Value of Zynga's workforce growth: +1,200 staff in the past quarter
  • Timeframe for Zynga's estimated value to surpass Electronic Arts' market value: since March 1.

Sources:

  • SharesPost Inc.
  • Electronic Arts Inc.
  • Facebook Inc.
  • Inside Network
  • AppData.com
  • 2010 Toronto Star

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