Вы находитесь на странице: 1из 20

Pinnacle Games, Inc.

Moving to the Cloud

Student Packet
Federal Recruiting Case Competition
Consulting Learning | Campus Recruiting

Copyright 2012 Deloitte Development LLC. All Rights Reserved.

2011

Student Packet | Table of Contents

1. TABLE OF CONTENTS
1. Table of Contents.........................................................................................................2
2. Case Overview & Scenario.........................................................................................3
Introduction............................................................................................................................ 3
About Cloud Computing........................................................................................................4
About the Client..................................................................................................................... 5
Case Scenario........................................................................................................................ 6

3. Case Competition Exhibits.........................................................................................7


E-Mail Correspondence 1......................................................................................................7
E-Mail Correspondence 2......................................................................................................8
E-Mail Correspondence 3......................................................................................................9
Financial Reports................................................................................................................. 10
Deloitte POV.......................................................................................................................... 11
Pinnacles Five Year Goals..................................................................................................12
Pinnacles General Organizational Structure.....................................................................12
Deloitte Service Area Details...............................................................................................13
News Articles........................................................................................................................ 17

4. Schedule & Logistics................................................................................................20


5. Rules & Guidelines....................................................................................................21
Signing Up............................................................................................................................ 21
Preparing your Solution......................................................................................................21
Solution and Materials Collection.......................................................................................21
Question and Answer Teleconference................................................................................22
Presentation Day.................................................................................................................. 22

2. CASE OVERVIEW & SCENARIO


The case study is designed to give you a glimpse into a day in the life of a Deloitte
consultant solving real-life business issues. The solution you generate should address
the problem from three distinct perspectives: Strategy & Operations, Human Capital, and
Technology. Many of the skills you utilize and ideas you generate in analyzing the problem
and recommending a solution will be representative of what our analysts do at their
respective client sites every day.

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


2

Consulting Learning | Campus Recruiting

Student Packet | Exhibits

Within this packet you will find the relevant case information to get started on your
presentation. In addition, external research is expected in order to create an innovative
solution. Remember, this competition is not only a great opportunity to further develop
your teamwork, presentation, critical thinking and analytical skills, but it is also a chance
to network with Deloitte practitioners and learn more about our career opportunities and
internship programs.
Finally, please note that Pinnacle Games, Inc. is a fictitious company. None of the
information described within this case is representative of a specific Deloitte client. Any
similarities between the company data and Deloitte clients are purely coincidental in
nature.
Thank you for your interest and participation. Good Luck!

Introduction
Gaming, once a simple pastime, is now a big business. In 2010, worldwide revenues for
the industry totaled $19.1 billion a touch lower than the annual GDP of Bolivia. The key
industry players, companies such as Electronic Arts, Activision Blizzard, and Zynga,
produce a variety of games with staggering rates of sales. For example, Activisions Call
of Duty sold 6.5 million copies in the first 24 hours after its release. As a point of
comparison, the final edition of the Harry Potter series sold 6.9 million copies on the day
of its debut. However, even with these blockbusters, the overall pie is shrinking. Online
and mobile gaming is stealing market share and redefining the gaming landscape. From
2008 to 2010, the sales of games for traditional consoles shrunk by $900 million. That
being said, hardware sales have been growing, and consoles will remain the largest
gaming segment for the next five years, even as revenue growth is expected to decline
as gamers spend more of their time on social and mobile gaming.
Ten years ago, games were played on consoles and purchased on disks now gamers
can use mobile phones, tablets, or PCs to download a game in mere minutes.
Innovations like 3D and HD graphics are increasing the file size of the products and
necessitating changes to the delivery mechanism. Instead of sending out a game on two
disks, online downloads are gradually becoming the method of choice. While these
enhanced graphics are good for gamers, the constant state of innovation is putting a
strain on the IT resources of many of the market leaders. In one interview, a developer
admitted that instead of sending their development files over the terribly slow network, it
was faster to ship them via FedEx. In order to please the game consumers and creators
alike, cloud computing is becoming an integral part of any gaming companys portfolio.
In fact, new players like Zynga already use this operating model and have come to be
known as the new brand of company born in the cloud.
Picking up on the trends, established gaming companies are turning to social and mobile
games to provide new revenue streams via ad revenue. They are also drawn by the lower
costs of the social media games development can take a few short weeks, and
expenditure is measured in thousands, not millions, of dollars. Another bonus of these
new platforms is their ability to generate sustained revenue streams as users buy
upgrades within the game (an example is Zyngas Mob Wars, wherein players pay real
currency for items that only exist within the world of their game. Zynga reportedly earns
over $22,000 daily on Mob Wars alone). This move to mobile and social gaming is driving
faster, almost continuous, design cycles. While this model ensures a constant stream of
Copyright 2012 Deloitte Development LLC. All Rights Reserved.
3

Consulting Learning | Campus Recruiting

Student Packet | Exhibits

games to appease consumers, recent reports have highlighted the strain the pressure of
constant delivery puts on the development staff. Gaming companies have seen
decreased morale and heightened attrition as a negative consequence of the shifts the
industry is facing.
Another side effect of the shift to mobile gaming is that the profile of a typical gamer is
dramatically changing. Traditionally, the biggest market segment was comprised of
males, aged 18-35, looking for games rich in graphics, sound, and with a solid storyline.
These types of consumers are willing to pay between $40 and $60 for a game and
upwards of $200 for the console on which to play it. Focused on this customer profile,
the gaming companies poured money into development with a high margin, low volume
revenue model. Enter social media and mobile games. The customer base shifts to a mix
of males and females, aged 5-55. Theyre looking for easy-to-use games the type that
will help kill time while they wait for the bus or stand in line a level of enjoyment that
they value at no more than $10 per game. With their low demands for quality, these
games cost mere thousands to develop and make up for their low margins with high
sales.
Due to the increased competition and changing atmosphere of the industry, many of the
largest gaming companies are growing through acquisition snatching up developing
studios for their intellectual capital. This helps offset some of the pricing pressures from
the value chain from console makers to internet service providers all of whom are
looking to control the distribution of games to customers, especially in this new age of
the cloud.

About Cloud Computing


Until a few years ago, consumers needed to buy hardware, software, and sometimes
data in order to use certain products. Recently, however, research and innovation has
led to a significant breakthrough in the way technology is delivered. In the past few
years, companies have been leveraging the Internet as a common infrastructure that can
be used to deliver products.
Cloud computing is a nebulous term that has many different meanings. Gartner
Research refers to the term as a style of computing where scalable and elastic ITenabled capabilities are delivered as a service to external customers using Internet
technologies.
In order to fully understand cloud computing, lets look at several examples of some of
the most successful products:
- Netflix uses Amazon Web Services (IaaS) to encode and deliver high-quality
video streams on devices such as PCs, game consoles, and smartphones. Cloud
computing has helped Netflix move from physical DVD rental to on-demand video
streaming and become the biggest online distributor of streaming videos
- OnLive, a cloud-based gaming company, allows on-demand and instant game
play on Internet-connected computers by using remote servers to host video
games. Cloud-based gaming will solve the device-content compatibility* issue
and increase the user base for interactive games
- Workday offers a Software-as-a-Service (SaaS) solution to provide cost and
resource savings to major companies that need an HR and Finance management
tool
Copyright 2012 Deloitte Development LLC. All Rights Reserved.
4

Consulting Learning | Campus Recruiting

Student Packet | Exhibits

In other words, it is no longer necessary to buy and install a suite of software for each
and every customer. Instead, one application can be loaded that would allow multiple
customers to log into a web based service that hosts the program. Workload shifts from
the computers of local customers to the servers of network computers that make up the
cloud.
Cloud computing functionality has exploded in the last few years, and the use of cloud
technologies has had a significant impact in the gaming industry. Cloud computing has
produced new revenue streams and has opened markets that were previously
unreachable. Customers are no longer required to buy a console and individual games.
Instead, games can be streamed directly from the web in order to provide significantly
more data to customers, allowing for a better user experience. Because of this,
traditional video game companies must change the way they develop games in order to
tap a market with significant potential for growth.

About the Client


Pinnacle Games, Inc. is a publicly traded American developer and distributer of video
games for gaming consoles. With over 7,000 employees, Pinnacle is the second
largest gaming company in the world and considers its strongest competition to be
companies such as Activision and Electronic Arts. In 2011, Pinnacle recorded a 30%
decline in revenue from the previous year, seeing a substantially higher decline than
the 20% decrease that the overall industry faced. To address their disappointing
performance Pinnacle just rolled out a new set of five year strategic goals aimed at
improving performance across several key measures (see Exhibit 4 for more details).
The key client contacts who have voiced concerns over cloud technology are:
Julia Stern Chief Executive Officer
Julia Stern has been Chief Executive Officer of Pinnacle since June 2007. Previously,
Ms. Stern served as the Chief Operating Officer of Pinnacle for 3 years. Prior to
joining Pinnacle, Ms. Stern served as the Chief Talent Officer for the Windows
Operating System Division of Microsoft. Ms. Stern has held executive management
positions at several companies including Dove, Panasonic, Coca Cola, and Kraft. Ms.
Stern holds an MBA from Harvard Business School and a B.A. in Mathematics from
Emory University.
Because of Ms. Sterns more traditional career path, she has not had much
experience in cloud computing and is resistant to changing the corporate strategy to
focus on an area where Pinnacle has little experience. She also is very concerned
about talent attrition and the happiness of Pinnacle employees. Ms. Stern will not
support such a large change without analytical evidence of the potential for growth.
Young Lee Vice President of Strategic Development
Mr. Lee has been Vice President of Strategic Development for Pinnacle since March
2011. Prior to joining Pinnacle, he was a Senior Associate of Corporate Strategy at
Google for 3 years. From June 2006 to March 2008, Mr. Lee served as an Equity
Research Associate at Goldman Sachs. Mr. Lee received a B.A. in Economics from
Northwestern University and an MBA from University of Chicago Booth School of
Business.
Copyright 2012 Deloitte Development LLC. All Rights Reserved.
5

Consulting Learning | Campus Recruiting

Student Packet | Exhibits

Mr. Lee is not afraid of large scale change, and coming from Google, sees the huge
potential for growth in cloud gaming. He would like to see additional research in the
future of the industry in order to make a sound investment decision.
Maria Morgan Chief Information Officer
Mrs. Morgan was recently hired as the Chief Information Officer at Pinnacle. She was
previously the Global IT lead for Disneys gaming division and has a computer
science background, receiving her undergraduate degree from the University of Texas
at Austin and her MBA from the MIT Sloan School of Management.
Mrs. Morgan is an avid supporter of technological advancement and a strong
proponent of moving Pinnacle towards cloud technology. She comes from an
analytical background and expects any proper solution to rely heavily on solid
quantitative reasoning.
Dave Cunningham Vice President of Corporate Finance
Mr. Cunningham has steadily advanced at Pinnacle since he began as a financial
analyst with the company in 1992. A University of California, Los Angeles alumni with
a degree in finance, he worked his way up to his current position as the global head of
corporate finance faster than any person in the history of the company.
Mr. Cunningham is wary of sweeping technological changes, especially when they
require significant financial investment. He expects requests for funding to be very
persuasive before he gives them the stamp of approval to go to the board.
* Note: Pinnacle and its employees are fictional and intended for illustrative purposes
only.

Case Scenario
After a rough final quarter of 2011, Pinnacles VP of Strategic Development, Young Lee,
considers the need to invest in technology that will allow the company to respond to the
changes in their market. From e-mail correspondence, he knows that the newly hired
CIO, Maria Morgan, is a strong proponent of embracing cloud technologies for improved
business processes and customer delivery. He contemplates suggesting an investment
in cloud at the board meeting in two weeks, but he knows that he needs a wellformulated plan, especially given that it would be such a large investment during
turbulent economic times. Because of the complex nature of the problem, Young Lee
decides to call upon Deloitte Consulting to assist with his presentation to the board.
Knowing that this is a multi-faceted problem, Mr. Lee asks Deloitte to bring a team
comprised of Human Capital, Technology, and Strategy & Operations practitioners. At his
team briefing he outlines the questions that he is looking to answer in the formulation of
this presentation:
1. What are some options for how Pinnacle can integrate cloud into their business in
order to achieve their five year goals?
Copyright 2012 Deloitte Development LLC. All Rights Reserved.
6

Consulting Learning | Campus Recruiting

Student Packet | Exhibits

2.

3.

4.

5.

a. Specifically, Mr. Lee has requested that Deloitte provide an analytical


evaluation of the current cloud options, along with the teams suggestion
as to which makes the most sense for Pinnacle to pursue
How does this cloud strategy fit into Pinnacles five year growth plan and strategic
vision?
a. Specifically, Mr. Lee has requested an implementation roadmap to
demonstrate how the strategy should be enacted
If Pinnacle implements cloud technology, it will be a dramatic shift to their current
overall structure (i.e., change the process of game development)
a. What factors regarding the operating model should be considered when
implementing a new technology?
b. How can Pinnacle manage the change that their employees will experience
with a dramatic shift to their operating model? How should the company
focus their talent strategy to ensure that they dont lose valuable
employees in the transition, while also ensuring that they have the
necessary capabilities for a cloud based business model?
Mr. Lee is concerned that the investment in cloud will put Pinnacle in an
undesirable financial position just as the worst of the economic crisis hits. On the
other hand, he knows that technological innovation is necessary to compete with
companies born in the cloud. What are some other concerns he should be
aware of and how can Pinnacle mitigate against those risks?
Mr. Lee mentions that some members of the board are resistant to an overall
strategic investment to the cloud. How should Mr. Lee present Deloittes
assessment to leadership to minimize resistance?

Following the team briefing Mr. Lee hands the Deloitte team a template on which to make
the presentation. He is heading on a business trip to Asia and will be out of pocket for
one week, after which he will meet with the team to be briefed on their findings. He
strongly encourages the team to perform external research prior to completing the
analysis and tells Deloitte to get creative in thinking of their solution, making sensible
assumptions when necessary.

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


7

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

3. CASE COMPETITION EXHIBITS


Exhibit 1: E-mail Correspondence
From: Morgan, Maria
Sent: Sunday, January 29, 2012 2:57 PM
To: Lee, Young; Cunningham, Dave
Subject: Investment in the Cloud
Hi Young and Dave,
I trust youve both been well since I last saw you at the board meeting in December. I
wanted to take a moment to write you regarding something that has been weighing
heavily on my mind these past few months. As you may know, I am a strong proponent of
moving the company toward a cloud solution, based on recent changes in the
marketplace and Pinnacles internal data transmission needs. I know its a big
investment, but now more than ever we need to take action.
Internally, delays in data transmission during the development cycle are coming back to
affect our bottom line. As one of numerous examples, during the crucial final
development period of Call to Battle IV, we lost 10 days of development time physically
shipping the disks to our global testers. Developers were working on materials that
hadnt had the bugs identified and ultimately it showed in the quality of our final
products, the amount of overtime we had to pay to both developers and testers, and the
sales of the game. With EAs Battlefield 3 and Activisions Call of Duty coming out on our
heels, we simply cant afford these kinds of delays.
On top of that, I know you have both been following the explosive growth of our mobile
and social gaming competition (Zyngas new platform innovations have been repeatedly
in the news if you havent read the New York Times Article from October, Zynga
Releases New Games and a New Platform, I would highly recommend it). We have to
make a move, for our stock price and in order to maintain our position as one of the
market leaders in the global gaming industry.
Let me know your opinions and what I can do to help prepare for our next board meeting.
I cannot stress how strongly I feel that immediate action is necessary.
Best,
Maria
Maria Morgan, CIO
Pinnacle Gaming, Inc
Phone: (919) 212-9999 | Fax: (919) 211-9999
mmorgan@pinnacle.com

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


8

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

From: Cunningham, Dave


Sent: Monday, January 30, 2012 3:19 PM
To: Lee, Young; Morgan, Maria
Subject: RE: Investment in the Cloud
Hi Maria,
Thank you for your e-mail. Its great to see that youre hitting the ground running in your
position as CIO. While I appreciate the need for Pinnacle to move toward a cloud
solution, Im apprehensive about being so aggressive in our board request. As you
acknowledged in your e-mail, moving to cloud technology would require a significant
capital investment. We are still in the beginning stages of our capital budgeting process,
but Global IT would have to make a very persuasive case in order to obtain that level of
funding.
Keep in mind that Pinnacle has some other significant projects in the works that would
limit the availability of funds for a project in the cloud, namely:
Ongoing implementation of our Oracle ERP system
Development costs for our new action and adventure game (set to be launched in
2013, this is expected to be our new Call to Battle-type blockbuster franchise)
Potential acquisition of one or multiple social and mobile gaming studios
If you are set upon presenting a cloud solution to the board, please think about bringing
in a third party source to validate the costs and benefits of such a solution. In the past,
Pinnacle has worked with Deloitte Consulting to excellent results. Perhaps you should
consider bringing them in for a short feasibility study.
Thanks,
Dave
Dave Cunningham
VP of Corporate Finance
Pinnacle Gaming, Inc
Phone: (919) 212-8888 | Fax: (919) 211-8888
dcunningham@pinnacle.com

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


9

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

From: Lee, Young


Sent: Monday, January 29, 2012 7:23 PM
To: Morgan, Maria; Cunningham, Dave
Subject: RE: Investment in the Cloud
Hi Maria and Dave,
I can see both sides of the argument here we need to invest in cloud but must make
sure that doing so does not adversely affect our financial position. Employees have emailed me arguing for both sides of the discussion. I agree that we should bring in a
third party consulting firm to do an in-depth analysis prior to the next board meeting. I
have begun negotiations with Deloitte Consulting and have asked for a team that
incorporates practitioners across their Technology, Human Capital, and Strategy
practices. Hopefully we get a well-rounded, analytical, and creative result that we can
bring to the board. Deloitte has proven itself over and over again, and I expect this
project to be no exception.
Please feel free to come to the final presentation a few days prior to the board meeting to
see what the Deloitte team has produced. I will send you the Outlook invite under
separate cover. Im sure there will be information that each of us finds relevant.
Cheers,
Young
Young Lee
VP of Strategic Development
Pinnacle Gaming, Inc
Phone: (919) 212-9889 | Fax: (919) 211-9988
ylee@pinnacle.com

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


10

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

Exhibit 2: Financial Report Income Statement

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


11

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

Exhibit 3: Deloitte Point of View (POV)


How can Deloittes Cloud computing services address Media & Entertainment
market challenges?

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


12

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

Exhibit 4: Pinnacles Five Year Goals

Grow top line revenues at least 20% by the end of December 2017
Enhance the customer experience by producing high-quality, timely, and
engaging game content
Strengthen Pinnacles internal culture in order to reduce attrition by 10%
and foster a positive and productive workplace
Acquire key intellectual property in order to widen footprint in rapidly
growing gaming segments
Improve the business processes in order to facilitate the internal
development of games
Expand into innovative technologies in order to stay at the forefront of the
worldwide gaming market

Exhibit 5: Pinnacles General Organizational Structure Excerpt

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


13

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

Exhibit 6: Deloitte Service Area Comparison

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


14

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


15

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

Exhibit 7: News Articles of Note


Potential Risks of Cloud

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


16

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

New Cloud Gaming Platform Exhibits at CES 2012


Posted 01/21/2012 01:24 AM ET
BEIJING, Jan. 21, 2012 /PRNewswire via COMTEX/ -- Cloud Union, currently operating the
single largest cloud gaming platform in China, attended CES 2012 in Las Vegas.
Cloud gaming platform provides a new form of "download-free" and "install-free" game
services via cloud computing technologies, which enables users to easily play high-end
3D video games, such as Crysis 2 or Need for Speed 14, on any of their personal
electronic devices. Because all a game's graphics are computed on cloud, cloud game
service can go beyond a player's hardware limits for a better and more enjoyable gaming
experience.
Cloud Union exhibited cloud gaming products running on note-PC, set-box, flash
webpage version and iPhone app as game controller. "Most of the electronic devices, as
long as they can connect to a network and decode video stream, will be able to enjoy
cloud game services. In theory, any game can be streamed to any device using CU's
technology, such as a notebook, TV, normal set-box, etc. We even connected PS3 with
our cloud, so if Sony agrees, you can play PS3 on any smartphone and smart TV in
China," said Danny Deng, the CEO of Cloud Union.
Unlike its competitors in the US, CU is dealing with a totally different market: huge, high
potential, but also very challenging. The box game market has been ruined by piracy
issues for a long period. MMO is the most dominated player in China's game market.
Players download top level PC games for free and never think about paying for them.
"Free" MMO games are easy too. "But there are also optimistic parts," Danny says. "The
population which is born between 1975-1985 are grown up, they were playing games
since their childhood. When they have the ability to decide the family's outcome, they are
looking for more creative entertainment ways." Another good piece of news is, since
China's government is calling for a new round of broadband bandwidth upgrading and
cost reduction, China's network operators need to find new killer applications to attract
users to upgrade bandwidth and pay more money on their service.
As currently the single largest cloud gaming platform in China, Cloud Union has
launched their services not only on PC, but also on TV platform. "We have made great
progress with WASU Digital, which is one of the biggest IPTV operators in China, to
enable every user to play cloud games in WASU's network," Danny said. "Compared to
the US, China is very different when it comes to the internet as well as TV industry. We
are already standing at a competitive position in the Chinese market, which the potential
competitors, such as Onlive and Gaikai, may not rival easily."
The iPhone and iPad has ended several companies' ambitions on the smartphone and
pad market. China's TV manufactures are also taking Apple TV as a strong competitor in
the future. They are trying to integrate more content, cloud games seems to be a very

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


17

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

suitable choice. "CU has entered this area and prepared for years, we have ported our
system to many smart TV and set-box, such as TCL, Lenovo, and Haier."
About Cloud Union
Cloud Union started R&D on cloud gaming technology in 2008. It is headquartered in Beijing,
China, and currently has 70 employees. Cloud Union's investors include Soft Bank, Intel
Capital, and other strategic investors which may bring value to the company. CU has just
announced that it has closed B Round, including which the total fund rising has reached over 10
million USD.
SOURCE Beijing Cloud Union Co., Ltd
Copyright (C) 2012 PR Newswire. All rights reserved
Zynga Releases New Games and a New Platform
NY Times, David Streitfeld
Posted 10/11/2011 09:01 PM ET
SAN FRANCISCO Oh, thank you for saving me! squeals Giselle the Lovely Maiden in
CastleVille, the latest effort from the game company Zynga.
Giselle the Lovely Maiden is not the only one who needs some help getting through the
Gloom. Zynga itself must keep up the momentum as it prepares for an expected $20
billion public offering in a manic market. It is the unquestioned leader in casual gaming
and one of the most successful Internet start-ups of any kind, but some of its most
recent player statistics look rather static.
Zynga executives put on a show for the media on Tuesday at the companys
headquarters here. They introduced several games, including CastleVille, Bingo, Hidden
Objects and a sequel to its early hit, Mafia Wars, as well as new ways of playing old
games.
They also talked about something that might be even more significant to the companys
future stockholders: a new playground that would leave it less captive to the whims of
Facebook, its crucial partner.
The larger game that is playing out is Zyngas effort to redefine itself. Fifty-nine million
people around the world played one of its games every day during the second quarter, a
wildly impressive number for a company less than five years old. But the number of
players is essentially unchanged from the fourth quarter of 2009.
And most of that playing is done via Facebook, which takes 30 percent of the revenue
that Zynga makes on its site and wields the power in the relationship.
In opening the festivities, Mark Pincus, Zyngas founder and chief executive, said the
company was not just trying to make the next hit game. It has much bigger designs.

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


18

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

What Zynga is calling Project Z will be a new platform, an environment tailored just for
games. Executives described it as a Web site done in partnership with Facebook, but
were murky on any financial aspects since their company was in its quiet period
preceding a public offering, as mandated by the Securities and Exchange Commission.
Clearly, however, Project Z shifts the balance of power back toward Zynga.
The platform might eventually do a lot more than that.
The world belongs to platforms. Everyone wants to be a platform, said Lou Kerner, an
analyst with Wedbush Securities. Look at Facebook: Two hundred thousand people are
writing code to make it better, and none of them are on Facebooks payroll.
Mr. Kerner sees Zynga making that same leap. If they can build and control a vibrant
gaming ecosystem and tax it appropriately, they can create significant shareholder
value, he said.
In this outcome, Zynga would be a little like a movie studio, distributing the work of
others. For the moment, however, it is living and dying by its own hits.
Cityville, its biggest game, has picked up a little steam recently with 13.5 million daily
users, according to AppData. FrontierVille, however, has been sliding faster than a
pioneer bitten by a varmint. Introduced in June 2010, FrontierVille peaked with nine
million daily players but now has about 5 percent of that.
Meanwhile, the popularity this summer of the Sims Social, a casual game from a big rival,
Electronic Arts, proved that the Zynga formula could be successfully captured by others.
Mr. Pincus stressed that Zynga was focusing on expanding the notion of play, including
getting gamers to do more during brief stints on mobile devices a five- or 15-minute
experience that feels like a meal.
Several of the new games are variants of current games designed for mobile devices.
There are about a billion PCs out there and four billion mobile devices, said the chief
mobile officer, David Ko. The opportunity is enormous.
Zynga needs a wide reach because its games are free. Nearly all its revenue comes from
selling virtual goods to the whales, the 5 percent of its players who want to get ahead
quickly, say, by buying tractors or weapons. The larger the pool of casual players, the
more whales.
CastleVille, which will be introduced before the end of the year, aims for mass appeal. In
addition to the hapless Giselle, characters include the Sexy Pirate Sonja, George the
Friendly Miner and Antonio, who in a short clip shown to the reporters dazzled a couple
of medieval babes when he took off his shirt. If this is too mushy for some players, they
can spend their time defending their castle from beasties, creatures whose bark and
bite was left for the moment to the imagination.

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


19

Consulting Learning | Campus Recruiting

Judge Packet | Judging Criteria & Presentation Requirements

Copyright 2012 Deloitte Development LLC. All Rights Reserved.


20

Consulting Learning | Campus Recruiting

Вам также может понравиться