Zynga's CEO rebound, Amazon's CryEngine move and Apple Watch gaming

[Music] [Applause] [Music] Hello and welcome to pocket gamer.biz is weekly news digest. This is for the week ending the 10th of April 2015. So I hope you had a happy Easter. We had a holiday last week. Um we had a happy Easter, but unfortunately my my bunny ears arrived late and they're broken. So that was a bit of a bit of a failure. So no video last week. We'll take those off now. Um pretend they never happened. Um okay. So, uh, back to the the news grind this week. Some some guess three bits of kind of of interesting news. Um, let's just kind of go through them in in in order of increasing significance. So, one kind of interesting one. It's still a bit of a rumor mill, but kind of confirmed, but not officially confirmed by by the main party. So, um, German mainly PC developer Krytek has been in trouble for a while really financially. um it was very much wedded to to a kind a a kind of retail PC and console model where it made very high-end um kind of PC console games sold them through publishers like

EA um that made its money that way grew to be very big in size with kind of studios all over kind of Europe so mainly in Germany but also Ukraine had in the UK um and it as kind of things have changed and everything's gone kind of um free to play and digital download and all that kind of stuff it's kind of struggled um but kind of there was a mystery a mystery um kind of bailout kind has happened in in in previous months and it's kind of come up this week that it seems like that mystery um benefactor has been Amazon. So obviously that's interesting for us on the on the mobile sphere where Amazon has increasingly been spending kind of bigger and bigger amounts of money to try and get a foothold into into mobile gaming. Um so we still don't really know kind of really even what how much money Amazon has spent. It's kind of rumored anything between kind of 50 and 70 million have been spent. Um but Crych is saying it's they've the company they've not said it's Amazon really but um the company who's who's kind of given them the money hasn't invested in them hasn't bought out Krytek but has bought kind of

licensing opportunities for its kind of cry engine. So that's that was Krytek's internal engine. Um originally started off for the for the Far Cry games. Um was very powerful and flexible at that time. They built it up into a separate kind of engine kind of business much like kind of the source engine or or Unity or or Unreal. Um not quite as success as successful. So the problem they kind of had with the Krytekch engine is it's always been very PC focused, console focused and they've had problems kind of getting it down to to so it works in the kind of the manner it needs to work on iOS and Android devices. So whether they've done it or not, we don't really know. But um it seems like this is another kind of strategic step. I think we call it strategic strength from Amazon spending, you know, fairly large amount of money. Obviously not really compared to the money spent on Twitch. So it was $940 million. Again, that seemed like a very odd deal. Amazon buying a company about kind of game streaming technology. I guess from Amazon's point of view that they play the very long game when it comes to um kind of investment and Amazon famously it share price tends to go up or has

gone up quite a lot since since it was formed but it very rarely makes profit and certainly doesn't make kind of Apple kind of grade profit. It kind of often makes a loss as well. So I guess that's kind of one that we kind of wait and see what really happens with that. Guess from my point of view, I kind of imagine what will happen is Amazon will has b basically taken a a kind of um a engine licensing model where it can use it for its own studios um but also can use it for pretty much kind of whoever um wants to use it um to make games for some sort of Amazon platform. Probably not so much focused on mobile or tablet really. I mean obviously they have their Fire TV kind of streaming box TV kind of thing which is a bit more like a console. Um, so I guess we kind of see Amazon moving down the food chain into the gaming sector. Um, and the Cry Engine deal is part of that. Um, we await to see kind of um, exactly what happens on that. Um, so another um, uh, kind of new story was kind of again kind of structural as well but very busy. So it's kind of as as in businessy so quite kind of interesting for us and that was I mean fairly shock

news. So um, the shock news was that um, Zinga um, changed its CEO with immediate effect. So um where where to start with Zinger really? So um obviously certain you know where it was now IPOed in 2011 as companies who IPO tend to do. It was at the top of its game then. It was massive in Facebook and people even Facebook hadn't IPOed then. So people were buying Zinga shares because they couldn't buy Facebook shares. Um and it had Farmville when it was the biggest gaming company in the world and it was kind of making loads of money blah blah blah. Um obviously since then it's basically fallen off a cliff. The share price is is still massively under water. it floated at $10 and it share price is kind of about $2 or $3 generally. Um so about so two years ago um there's a big restructuring at Zinga they got rid of their CEO um and founder Mark Pinkas or he kind of became chairman of the body was kind of edged out um and they brought in kind of an executive team who had been kind of has had proven success um in the games industry. So Don Matrick was the CEO. He'd worked at EA and um Microsoft. So

you know fairly well um he understood big businesses. He understood and I think it's the reason he was brought in not because he understood games particularly but he understood the gaming business. He understood kind of financial regularity and making sure um kind of you're not spending ridiculous amounts of money on staff and everything kind of has has kind of a profit loss attached to it and basically running a proper company which you know when companies start off up and IPO they tend to not be so tight on that kind of stuff. So, in the two years since Dom was there, he's built up kind of a fairly strong executive team. He's taken people from um DNA and and basically got rid of the the pretty much all the top executives who were there um originally under Pinkus um and brought in his own team, most of whom have had pretty good experience in in either in gaming or in mobile. So, the big news was that that he was suddenly out with immediate effect, which of doesn't really happen very often. I mean, he was he was well paid for his two years there in tens of millions of dollars of share options and such like. Um but I guess the really big surprise was that Mark Pinkis was was was kind of back in. So the kind of the guy who um was kind of kicked out

because he wasn't he founded the company and was very successful founding it but probably wasn't the guy to kind of run it dayto-day has after two years of the of the guy who was brought in to kind of give it more structural rigidity and financial um kind of security got kicked out and they brought the old guy back. I mean, I guess the real problem for Zinger is they they've tried this kind of this new model of being like a an operationally aware company and um for two years and it share price hasn't changed at all. You could argue financially they've done a lot of restructuring. They've sheded you know hundreds of jobs. You know, at one point they got rid of like 500 people pretty much in one go. So there's been a lot of kind of operational changing and reorganization and they've effectively moved from a Facebook um oriented company to a mobile company. So they quite pleased and all the time they'll say they're a mobile first company. Um also during during um Don Matrick's time they bought um UK developer Natural Motion again for a large sum of money for over $500 million. So um the first game from that from from Natural Motion is not yet out yet. So it's coming out

Dawn of um Titans. So that's highly um anticipated. Looks amazing. But obviously with mobile games or any game that doesn't come out yet, you know, you don't really know. Is it going to be a great success? this is it going to be a kind of flop. Um it's very competitive market. Obviously you have to spend a lot of marketing money to to to get um your your game even downloaded to see whether you and then become top grossing you know months later. So a bit of a kind of kind of um confusing time at Zinger really. They kind of seem to be on the right track. They seem to have kind of done some sort of turnaround but the guy who did the turnaround is been kicked out. Um if you're a shareholder you're not happy at all because the share price is is really you know down in the dumps. There's obviously no dividend. As I say, every quarter they're still lossmaking. Um, their losses have been decreasing, but it's very hard to run a public company that's lossmaking um, quarter after quarter. I mean, they still have lots of money. They still have over a billion dollars of cash from when they IPOed. So, certainly not a loss cause yet, but um, you're kind of getting to the stage now where this is kind of like plan C for Zinga and they're going to have to decide really, you know, are they going to have to shrink down a lot, get rid of maybe half

their staff and really focus on some core things. Um, they haven't really had a big hit on on mobile. um they've kind of wasted a lot of money on the kind of um uh OMG pop kind of acquisition and things like that. Um so there needs to be either kind of I guess a doubling down and betting big on something and hoping it works or or kind of like really scaling down maybe giving money back to shareholders um because shareholders just like money. That's why they're shareholders. Um so so I guess I guess the same as the Amazon kind of cringy deal. Kind of an interesting news item this week. Um but we kind of wait to see kind of what the outcome of that is in future months. And I guess the the the third um not really a news story, kind of a news event was was the um was the Apple Watch. So Apple has been kind of like tantalizing us with with it Apple Watch for for almost um well September it was announced. So um that's certainly over 6 months. Um and the pre-orders went live today. So at um was 8 1 minute past 8 in the UK British summer time. So that's 1 minute past 9 in central European time and it was um 1 minute past midnight in San

Francisco or on the Pacific. Um so that was when pre-orders went live. Um you go on their pre-order obviously there's three different types of watches, lots of different straps, lots of um if you're very rich you can buy the gold one or that kind of malarkey. Um uh and it's kind of interesting because Apple as yet hasn't said how many pre-orders it's it's taken, but what's clearly kind of happened is um there's a lot of demand as we would kind of expect for any Apple product. Um supply looks like it's much more constrained than we thought particularly um there two different types of watches. So there's the there's a 38 mm um watch smaller and a 42mm one which is bigger. Obviously kind of men tend to be oh we like big things where big kind of thick wrist we want but bigger watch. It also has a bigger battery life. So the tendency even it's a bit more expensive I guess was people to go to the 42 mm one. That one seem to sell out faster. When we say sell out, what we mean is you can still order them even now. You can still order Apple watches, but the delivery time has gone back from what was originally announced as the 24th of April. So in

two weeks time um and now that's gone back. If you order one now, um your delivery time the only is sometime in June. Um, and even for people who pre-ordered them straight away, you got a delivery time that was said said the 24th of April to early um, May. So, there's still kind of quite a bit of um, kind of flexibility in when Apple is going to actually say it's going to deliver these things. And obviously, because it's got factories in China, it's churning them out at a rapid rate or not. But, as with all Apple products, when they come out, there tends to be more demand and it's very hard um, for them to judge. And the other thing is obviously they not made any Apple Watches at volume before and Apple watches seem to be very complicated things to make. So, um I guess the interesting thing from um a gaming point of view is is Apple Watch going to be a big gaming thing? We don't know. Um but on pocket gamerbiz, we have just started a list um small at the moment, only only like half only a dozen or so games. I'm sure there'll be lots and lots of thousands of games probably announced for the Apple Watch, but we're starting to track those and um be interesting to see what developers are doing with them. I guess we'll find out a bit more in two weeks time when hopefully the our Apple Watch will be will be turning up. See you next week.

[Applause]