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I agree and I'm not entirely sure that the company can sustain the same level of profitability, given the fickleness of gamers. My big worry is that their prof

by cjlars 16y ago

I agree and I'm not entirely sure that the company can sustain the same level of profitability, given the fickleness of gamers. My big worry is that their profit margins return to industry average levels. There's plenty of reason to believe that they would earn closer to 5 or 10 percent vs. the ~%45 they currently get as time goes on. In that case, the company needs to grow to several billion dollars in revenue and become one of the largest game publishing companies in the world to support this valuation. I'm not entirely sure I see that happening for Zynga.

jacques_chester 16y ago
I'm not so sure. Zygna's model is less like conventional computer games (once-off payment or lately recurring payment) and much more like slots machine gambling. People get a little rush from their pointless achievements and are prepared to pay for it. Given that the product has almost zero distribution costs, I expect profits to remain high. Even competition is going to struggle to bring down those profits, because of the same network effects Facebook now enjoys over competitors.