Let’s Get Ready to ZYYYYYYYYYYNGA

Today is the day that Zynga’s ($ZNGA) IPO start’s trading.     The company priced the shares at $10 – the top of the range – raising $ 1B and giving them a $ 7B valuation.   For those unfamiliar with Zynga, Dealbook explains:

“Founded in 2007, Zynga has emerged as the shining example of Gaming 2.0.

Zynga attracts 222 million people each month on Facebook, making it the largest gaming company on the social network. A small fraction of users, less than 2 percent, pay money to populate their farms or build their cities in games like FarmVille and CityVille.

But the virtual goods are generating real profits. Each day, players spend $3 million in Zynga’s economy. In the first nine months of the year, the company had earnings of $30.7 million, on revenue of $828.9 million.”

Zynga’s business model – getting people to pay real money for virtual goods – instinctively irks the crap out of so many of us.   I sat back this morning, though, and thought “wait a second, you pay to play Zynga’s games, you pay to play Electronic Arts’s games (ERTS) – why does Zynga seem so much more bubbleicious?”     Then I realized – we BUY Electronic Arts’s games, but we almost never pay to upgrade the game playing experience.   With Zynga, on the other hand, the game is free, but you have to fork over cash to become a real gangsta.   Is that “dumber?”  “Sillier?”  Who knows – maybe it’s smarter.  Time will tell.

I should probably note, at this point, that I play neither Zynga’s games nor Electronic Arts’s games.  I haven’t owned a gaming console for at least 10 years, and I’ve never played a Zynga game online.    I don’t need to mess around with electronic chickens and digital cropsmy real LIFE is Farmville, SON!

I have no positions in $ZNGA or $ERTS, but I own stock in Bwin Party Digital Entertainment (PYGMF) – an online poker company.  Some people now think that Zynga could become a major player in the future of online poker, if they manage to get involved with any potential legalization of real money play.

If any of my readers play Zynga’s games on Facebook, please do weigh in in the comments section – let me know if you play the games but don’t buy extra digital goods, or if you play the games and fork over money to buy digital accoutrements.

-KD

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