Mike Verdu is the latest Zynga Inc (NASDAQ:ZNGA) employee to leave the game maker, to establish his own startup TapZen Inc to make games, reports Bloomberg. The TapZen business model is based on the free online gaming started by Zynga. The games are designed for tablets. Zynga has invested $10 million in TapZen and will no doubt receive the benefit. TapZen has a total of six employees. Zynga Inc (NASDAQ:ZNGA) will, however, face the user’s retention problem as the new upcoming firms will try to attract the customers of Zynga.
Zynga Inc (NASDAQ:ZNGA) recently has seen the departure of several top line executives who were vital to the growth of the company. Sales dropped, and the shares were deep in red by 67 percent. The employees have been leaving the biggest social game maker to start their own companies.
“There are a lot of people who left Zynga Inc (NASDAQ:ZNGA) who are still hungry,” said Amitt Mahajan, a Zynga executive who departed in 2011 to start San Francisco-based mobile-game studio Red Hot Labs. “You have a lot of people who say, ‘Hey, I can go do something for myself, and I have all this knowledge to do it.’”
There are approximately four more startup game companies along with TapZen and Red Hot Labs, all started by ex-employees of Zynga. Bee Cave Games Inc., created by Erik Bethke, has introduced “Blackjack Casino.” The other one is JuiceBox Games Inc., started by five Zynga former employees, is looking forward to come up with “Honorbound,” a role-playing game for smartphones and tablets, later this year.
The latest startup TapZen is making games primarily for tablets, unlike Zynga Inc (NASDAQ:ZNGA), which enjoys a wide base of gamers and users for its laptops and desktops games but is finding it difficult to garner a market share in handheld devices like mobile and computers.
Revenue dropped for Zynga Inc (NASDAQ:ZNGA) as users are shifting from desktops to the mobiles. For the first quarter of 2013, users declined 13 percent to 253 million. Revenue in the quarter is expected to be in the range of $225 million to $235 million, a decline of over $260.1 million as estimated by analysts.
Mahajan helped form a group of former executives of Zynga Inc (NASDAQ:ZNGA) called Red Dog Group. The group holds Skype chats and meet once a month to discuss developments. The group’s name reflects Zynga’s logo of a white dog on a red background. Members of the Red Dog Group are discussing how to raise money from investors and how to create a good mobile game. The company is giving training to managers at Zynga Inc (NASDAQ:ZNGA) on how to design games and attract users.
“We’ve all come out of this really strong with the ability to run some companies,” said Roger Dickey, creator of the Zynga Inc (NASDAQ:ZNGA) hit “Mafia Wars,” who left the company in 2011 to invest in startups.