Zynga 2012 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2012 Zynga annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 122

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122

language offerings. Our ability to expand our business and to attract talented employees and players in an
increasing number of international markets will require considerable management attention and resources and is
subject to the particular challenges of supporting a rapidly growing business in an environment of multiple
languages, cultures, customs, legal systems, alternative dispute systems, regulatory systems and commercial
infrastructures. We have experienced difficulties in the past and have not been successful in all the countries we
have entered. We may not be able to offer our games in certain countries. Expanding our international focus may
subject us to risks that we have not faced before or increase risks that we currently face, including risks
associated with:
• recruiting and retaining talented and capable management and employees in foreign countries;
• challenges caused by distance, language and cultural differences;
• developing and customizing games and other offerings that appeal to the tastes and preferences of
players in international markets;
• competition from local game makers with intellectual property rights and significant market share in
those markets and with a better understanding of player preferences;
• utilizing, protecting and enforcing our intellectual property rights;
• negotiating agreements with local distribution platforms that are sufficiently economically beneficial to
us and protective of our rights;
• the inability to extend proprietary rights in our brand, content or technology into new jurisdictions;
• implementing alternative payment methods for virtual goods in a manner that complies with local laws
and practices and protects us from fraud;
• compliance with applicable foreign laws and regulations, including privacy laws and laws relating to
content;
• compliance with anti-bribery laws including without limitation, compliance with the Foreign Corrupt
Practices Act;
• credit risk and higher levels of payment fraud;
• currency exchange rate fluctuations;
• protectionist laws and business practices that favor local businesses in some countries;
• foreign tax consequences;
• foreign exchange controls or U.S. tax restrictions that might restrict or prevent us from repatriating
income earned in countries outside the United States;
• political, economic and social instability;
• higher costs associated with doing business internationally;
• export or import regulations; and
• trade and tariff restrictions.
Entering new international markets will be expensive, our ability to successfully gain market acceptance in any
particular market is uncertain, and the distraction of our senior management team could harm our business.
Competition within the broader entertainment industry is intense and our existing and potential players may
be attracted to competing forms of entertainment such as offline and traditional online games, television,
movies and sports, as well as other entertainment options on the Internet.
Our players face a vast array of entertainment choices. Other forms of entertainment, such as offline,
traditional online, personal computer and console games, television, movies, sports, RMG and the Internet, are
19