Zynga Industry Analysis

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Andréa Butler BA 3103 November 15, 2011 Case Analysis #4 Zynga is a social network game developer located in San Francisco. The company develops browser-based games that work both stand-alone and as application widgets on social networking websites. Zynga has 232 active monthly users and posted a net income of $90.6 million last year. Zynga and its competitors have capitalized on the popularity of social networks by continue to create games where players can gain access virtually through social networks and interact with other players globally. As the accessibility to social networks is increasing due mobile devices, tablets, and laptops, more gaming companies are looking to expand their business in this industry. However, there are many factors companies in this industry need to consider in order to stay successful. Porter’s 6 Forces can be used to assess an industry’s competitive environment. Included in the Porter’s 6 Forces are threat of entry, supplier power, buyer power, substitutes, complements, and industry rivalry. Figure 1: Porter’s 6 Forces on Interactive (Social) Gaming Industry Suppliers * Game developers | Substitutes * Music * Film * Live events * Sports | Industry Rivalry * Zynga * Vostu * Electronic Arts Inc. * Mingleplay Inc. * MyTopia * Portalarium * Gravity Bear * Crowdstar | Potential Entrants * Companies with innovative branding and gaming titles | Complements * None | Buyers * Social gamers * “whales” | Buyer Power Buyers in the social gaming industry are solely social network gamers/consumers. According to the article Zynga’s Quest for Big-Spending Whales, Zynga stated that they rely on a small percentage of their players for nearly all of their revenue. Consumers have a lot of power in this industry because they can demand better quality products. Buyers can easily

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