Zynga 2013 Annual Report Download - page 22

Table of Contents
Some of our players may make sales or purchases of virtual goods used in our games through unauthorized or fraudulent third
-party
websites, which may reduce our revenue.
Virtual goods in our games have no monetary value outside of our games. Nonetheless, some of our players may make sales and/or
purchases of our virtual goods, such as Zynga Poker virtual poker chips, through unauthorized third-party sellers in exchange for real currency.
These unauthorized or fraudulent transactions are usually arranged on third-party websites and the virtual goods offered may have been obtained
through unauthorized means such as exploiting vulnerabilities in our games, from scamming our players with fake offers or virtual goods or
other game benefits, or from credit card fraud. We do not generate any revenue from these transactions. These unauthorized purchases and sales
from third-party sellers could impede our revenue and profit growth by, among other things:
To discourage unauthorized purchases and sales of our virtual goods, we state in our terms of service that the buying or selling of virtual
currency and virtual goods from unauthorized third-party sellers may result in bans from our games or legal action. We have banned players as a
result of such activities. We have also filed lawsuits against third parties attempting to “sell” virtual goods from our games, particularly poker
chips from Zynga Poker , outside of our games. We have also employed technological measures to help detect unauthorized transactions and
continue to develop additional methods and processes by which we can identify unauthorized transactions and block such transactions. However,
there can be no assurance that our efforts to prevent or minimize these unauthorized or fraudulent transactions will be successful.
Any failure or significant interruption in our infrastructure could impact our operations and harm our business.
Our technology infrastructure is critical to the performance of our games and to player satisfaction. Our games run on a complex
distributed system, or what is commonly known as cloud computing. We own, operate and maintain the primary elements of this system, but
some elements of this system are operated by third parties that we do not control and which would require significant time to replace. We have
experienced, and may in the future experience, website disruptions, outages and other performance problems due to a variety of factors,
including infrastructure changes, human or software errors and capacity constraints. For example, the operation of CityVille was interrupted for
several hours in April 2011 and the operation of most of our games was interrupted for several hours in January 2013, in each case due to
network outages. If a particular game is unavailable when players attempt to access it or navigation through a game is slower than they expect,
players may stop playing the game and may be less likely to return to the game as often, if at all. A failure or significant interruption in our game
service would harm our reputation and operations. We expect to continue to make significant investments to our technology infrastructure to
maintain and improve all aspects of player experience and game performance. To the extent we do not effectively address capacity constraints,
upgrade our systems as needed and continually develop our technology and network architecture to accommodate increasing traffic, our
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decreasing revenue from authorized transactions;
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creating downward pressure on the prices we charge players for our virtual currency and virtual goods;
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increasing chargebacks from unauthorized credit card transactions;
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causing us to lose revenue from paying players as our partners increase their credit card fraud prevention efforts;
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causing us to lose revenue from paying players who stop playing a particular game;
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increasing costs we incur to develop technological measures to curtail unauthorized transactions;
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generating legal claims relating to the diminution of value of our virtual goods;
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result in negative publicity or harm our reputation with players and partners; and
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increasing customer support costs to respond to dissatisfied players.