Despite massive financial success in the social gaming market during the last four years, several of Zynga's developers are expected to leave the company.
Social gaming's biggest company, Zynga, is going to be worth at lot of money to potential shareholders when the company goes live later this month -- but the company may very well lose a ton of their in-house development talent during the process.
According to Reuters, Zynga is going to promote themselves to potential investors in a series of "road shows" headlined by CEO Mark Pincus, COO John Schappert and CFO David Wehner, the company's three biggest public faces. Although the company has been facing a handful of ups and downs with property acquisition and declining profits despite doubling their revenue, huge changes will shifts the company's financial outlook. When Zynga prices its shares on the stock market as "ZNGA," analysts say the company should be worth more than Blizzard/Activision and Electronic Arts:
Sterne Agee analyst Arvind Bhatia said attention will center on the company's valuation, estimated at around $14 billion.
That would price Zynga higher than videogame heavyweight Activision Blizzard's $13.85 billion market capitalization, or Electronic Arts' $7.2 billion.
Bhatia said the company will need to outline a clear growth strategy during its roadshow to justify that rich price tag.
However, several sources indicate that whatever Zynga gains in public investors, it will lose in talent. It's been a running dialogue in The New York Times, as many employees have spoken out about the "messy and ruthless" working conditions largely implemented by CEO Mark Pincus. It's no industry secret that the company is known for high turnover, as many workers within the company are pushed to work long hours on tight budgets and deadlines. As many Zynga staffers have the option of "cashing out" their share in the company, the assumption is that many other companies will try to snatch up developers in the shuffle:
With the I.P.O. fast approaching, competitors are preparing to poach disgruntled staff members. This month, one recruiting firm sent cookie baskets to some 150 Zynga employees.
"I expect a lot of game and tech companies will begin recruiting Zynga's talent after their equity becomes liquid," said Gabrielle Toledano, head of human resources for Electronic Arts. "Competitors will make the case that they offer much more compelling opportunities for creative people."
Zynga declined to comment, citing the mandatory quiet period before its I.P.O.
Regardless of the company's public appearance, though, the fact remains that Zynga is way ahead of the competition with 260 million monthly active users on Facebook. It'll take a few years to see the real implications of I.P.O. process, barring a total talent drought. But as the social gaming market widens, Zynga will face tough challenges either way.