Below are the prepared remarks from Zynga COO Clive Downie. Remarks focused on (1) Zynga Inc (NASDAQ:ZNGA)’s Q2 financial results and updated guidance (2) Zynga’s progress against company’s strategy of grow and sustain and create new (3) Zynga’s entrance into the Sports category and multi-year licensing agreements with the NFL, NFL Players Inc. and Tiger Woods and (4) Zynga’s multi-year agreement with Warner Bros. Interactive Entertainment to expand our offering in the Runner category with their beloved Looney Tunes brand.
Check CEO’s remarks here.
Clive Downie, COO, Zynga
Thanks Don and hello everyone. First, I want to spend some time discussing our progress against our grow and sustain efforts, as well as our commitment to creating new hits. Then, I will provide an update on our content strategy and go into further details on the new games we are building.
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Starting with our FarmVille franchise, we are pleased with our team’s continued commitment to delight consumers through our live web services of FarmVille 1 and FarmVille 2. On the mobile front, since FarmVille 2: Country Escape’s worldwide launch, we have received meaningful feedback from our players which has allowed us to iterate and improve the game with a number of post-launch features such as our Summer Event Series.
At the end of June, our first event in the series received an incredible consumer response and – as a result of the feature – we saw a 75 percent increase in average daily bookings for the game. Additionally, last month the game achieved top U.S. chart positions including Top 5 Grossing on iPad, and Top 10 Grossing on both iPhone and Google Play. Based on the results of our Summer Event series, our teams have operationalized their learnings and developed a robust event schedule for Country Escape that we believe will add more value to consumers and grow the game over time.
We are also introducing new ways to connect consumers to our products. In July, we launched Zynga’s first national television ad campaign with a goal of reaching new consumers. We are pleased with the return on our investment for this TV campaign and we expect to engage in more targeted, highly strategic marketing initiatives including future TV campaigns for top priority products.
Turning to our other franchises, as Don mentioned, Q2 was a launch quarter for us and we expected some volatility as we prepared for the global launch of two franchise mobile products – New Zynga Poker and the New Words With Friends. Deliberately holding back these games was an important decision for us and not one that we took lightly. Moving these two releases to the back half of the year is allowing us to further test these games and generate player feedback that will lead to a higher quality experience.
In terms of our Words With Friends franchise, in March we entered geo-lock in select markets and we have slowly ramped into more geographies to pursue deeper consumer insights which are positively influencing our game development process. For example, as a result of our testing, we have found our players want to play more games simultaneously and at a quicker pace, so we have tuned our features to deliver that desired game play and improve the overall player experience.
Looking at our Casino business, in Q2 our teams generated double digit bookings growth across the franchise, with bookings up 13 percent sequentially. This past quarter, we launched a number of new features in our Poker and Slots games as part of our effort to deliver consumers authentic casino experiences.
In late Q2 our Poker product, which just celebrated its 7th birthday, introduced a new web feature called Leagues. Leagues were one of the most requested features from our players, adding a new social layer to the game where players are challenged to compete, improve and win. We value all of our consumers and take introduction of new products and features very seriously. And our Poker fans in particular – bearing in mind the age of the product – are one of our most cherished communities. Therefore, we have been slowly ramping the New Zynga Poker product in test markets while we iterate, integrate their feedback and refine the game prior to global introduction.
On Slots, we continue to align with mainstream brands that resonate with our players such as Sharknado and Ted, as well as our own IP like FarmVille, all of which recently launched as integrated slots games inside of our Hit It Rich! product which now offers more than 36 themed slot experiences to consumers on a daily basis.
As Don mentioned, we are encouraged by the live services from NaturalMotion and are seeing positive signs from our integration of Zynga’s live operations expertise into their product line-up.
In Racing, we continued to make our products available to more consumers worldwide, bringing CSR Classics to Google Play in Q2. Since it’s April launch on Google Play, the game has amassed 4.5 million downloads as of June 30, 2014. Moving to our People category, Clumsy Ninja also expanded to new platforms in Q2 with its launch on Google Play, which to date has achieved 4.4 million downloads as of June 30, 2014.
Looking at our future product pipeline, we are making significant investments in new game development and giving our teams the runway they need to build higher quality products. Our teams are aligning against our product principles that Don described which are – (1) create the most appealing content, (2) drive the most connected experience and (3) develop the most personalized game play. This is requiring more time investment in 2014 in order to deliver an exciting, unique and distinct slate in the back half of this year and into 2015.
Now I would like to go deeper on how our content strategy is evolving, reflecting the most diverse game portfolio in Zynga’s history and allowing us to span more demographics, player types and entertainment affinities. Today, we announced our expansion into two additional content categories – Sports and Runner.
Starting with Sports – we believe it’s one of the most evergreen and global consumer categories.
The sheer scale of American Football is astounding – with over 112 million people watching the Super Bowl and over 30 million people playing Fantasy Football each year.
Our new mobile Football game – NFL Showdown – blends Zynga’s expertise in free-to-play social games to deliver consumers a new year-round way to engage with their favorite NFL teams and players. NFL Showdown is a manager-style mobile-first simulation game that offers sports enthusiasts a unique social experience that delivers authenticity, accessibility and competition. The game puts fans in the thick of the action, letting them engage with their favorite teams and players 365 days a year, taking on the roles of Coach, General Manager and Owner as they manage their team to victory.
We believe that by partnering with the NFL and NFL Players Incorporated, we can deliver consumers an authentic football management game, and we look forward to getting player feedback during our NFL Showdown geo-lock which went live today.
With regards to Golf, we are incredibly excited to be partnering with golf icon Tiger Woods. Tiger is one of the most recognized and accomplished athletes in the world, and has influenced the sport of golf since he joined the PGA in 1996. He is the first golfer in history to hold all four professional major championships at the same time including 4 Masters Tournaments.
Golf’s massive global appeal and innate social nature lends itself well to mobile games and fosters the on-the-go competition we know our players want. By combining Tiger Wood’s unparalleled golf insights with our ability to create meaningful connections between consumers, we can develop a truly unique experience that brings authenticity and accessibility to sports enthusiasts. We are looking forward to making this game available globally in 2015 and giving our players and Tiger’s fans a new way to interact with their favorite golfer.
Our push into the Sports category – and the development of NFL Showdown and our Tiger Woods golf game – is being led by our Zynga Orlando Studio. The team includes several gaming industry veterans with a rich pedigree in mainstream sports and entertainment franchises. The team understands the art of developing sports games and the high fidelity details consumers expect. From gameplay simulation to character design and animation – the team has a history of delivering sports fans transformative, authentic entertainment experiences that feels as real as their favorite pastime.
There is an enduring connection between consumers and sports franchises, events and personalities. Yet, today, only four percent of mobile game revenue is derived from sports-focused games – whereas last year roughly 12 percent of all console video games sold in the US were sports-related.
So, Sports is clearly under indexed on mobile – and we believe that the long-term potential for this category is incredibly promising and look forward to delivering a new franchise with Zynga Sports 365 to fans around the world starting today with the geo-lock of NFL Showdown.
In regards to the Runner category, we are extremely proud to be partnering with Warner Brothers Interactive Entertainment to bring the iconic Looney Tunes brand to mobile. Looney Tunes is one of the world’s most recognized brands, with high-charged characters that have engaged consumers for decades and are a perfect fit for the fast-paced nature of runner games. We are working closely with Warner Brothers Interactive Entertainment to bring exciting new features to this mainstay category in mobile games, and we look forward to sharing more details in the coming months as our teams approach geo-lock.
With that, I will turn it over to our Chief Financial Officer, David Lee, to go deeper on the financial details.