Zynga must increase conversion for future success – Midia

Zynga posted its best revenue and booking performance in four years during Q2 2017, with revenue reaching $209.2m, up from $181.7m this time last year, and 21m daily active users compared to Q2 2016’s 18m DAUs.

However, Midia Research analyst Karol Severin has told MCV that the company’s main focus going forward should be "to increase conversion to payment and spend of existing users," as this will be vital for any success in the future.

"Advertising revenue has declined slightly year on year, while the mobile games revenue has increased," Severin said.

"In Q2 2017, advertising accounted for 22 per cent of total revenue, down from 25 per cent in 2016. The big driver of the company’s newly found profitability was its 28 per cent year on year increase in monthly payer conversion from 1.8 per cent to 2.3 per cent.

"Conversion will play an increasingly key role in Zynga’s future success, especially as Zynga’s user growth is flat compared to the previous quarter and the impact of advertising is slowly losing weight in the company’s commercial performance. Zynga’s average daily active user currently spends approximately $3.27 per month."

To help propel Zynga’s future conversion rate, Severin adds that the company "also needs to continue improving its monthly to daily user ratio." 

"He continued: To boost engagement, the company is rightly looking beyond just the traditional retention and user metrics.

It continues to deploy tactics to strengthen brand loyalty in the hope of capturing more of users’ digital entertainment time and spend. Crucially, Zynga is building stronger bonds between users and key title brands not only in the gaming world, but also across entertainment. Prime examples of this are the company’s recent announcement to spin off Words With Friends into a TV game-show in partnership with MGM and the social events and partnerships with the The Fate of The Furious film and the Lamborghini Brand.

In the always-on world, creating emotional connections with gamers across the entertainment spectrum (video, music, media), rather than just within their immediate gaming environment, is key for gaming companies looking to establish their brands as commonly accepted parts of consumers’ digital lives."

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