Zynga 2013 Annual Report Download - page 24

Table of Contents
We rely on a small portion of our total players for nearly all of our revenue.
Compared to all players who play our games in any period, only a small portion are paying players. During the three months ended
December 31, 2013, we had approximately 1.3 million MUPs (excluding payers who use certain payment methods for which unique payer data
is not available), who represent approximately two percent of our total players. We lose players in the ordinary course of business. In order to
sustain our revenue levels, we must attract, retain and increase the number of players or more effectively monetize our players. To retain players,
we must devote significant resources so that the games they play retain their interest and attract them to our other games. If we fail to grow or
sustain the number of our players, or if the rates at which we attract and retain players declines or if the average amount our players pay declines,
our business may not grow and our financial results will suffer.
Any restructuring actions and cost reduction initiatives that we undertake may not deliver the expected results and these actions may
adversely affect our business.
In 2013 and in early 2014, we implemented certain restructuring actions and cost reduction initiatives to better align our operating
expenses with our revenue, including reducing our headcount, rationalizing our product pipeline, reducing marketing and technology
expenditures and consolidating certain facilities, and we plan to continue to manage costs to better and more efficiently manage our business. For
example, in the second quarter of 2013, we implemented a restructuring plan that included a reduction in work force of approximately 520
employees and the closure of certain office facilities as part of an overall plan to reduce our cost structure. In early 2014, we implemented a
restructuring plan that included a reduction in work force of approximately 314 employees and the closure of certain office facilities, as part of
an overall plan to reduce our cost structure. This most recent restructuring plan and other such efforts could result in disruptions to our
operations and adversely affect our business.
To effectively manage our business and operations, we will need to continue to focus on spending significant resources to improve our
technology infrastructure, our operational, financial and management controls, and our reporting systems and procedures by, among other things:
These enhancements and improvements will require capital expenditures and allocation of valuable management and employee resources.
We expect to continue to actively monitor our costs, however, if we do not fully realize or maintain the anticipated benefits of any
restructuring actions and cost reduction initiatives, our business could be adversely affected. In addition, we cannot be sure that the cost
reduction initiatives will be as successful in reducing our overall expenses as expected or that additional costs will not offset any such reductions.
If our operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses, our operating results will
suffer.
If we fail to effectively manage our human resources, our business may suffer.
Our ability to compete and grow depends in large part on the efforts and talents of our employees. Such employees, particularly game
designers, product managers, engineers and executives are in high demand, and we devote significant resources to identifying, recruiting, hiring,
training, successfully integrating and retaining these employees. We have experienced significant turnover in our headcount over the last year,
including within our senior management team, which has placed and will continue to place significant demands on our management
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monitoring and updating our technology infrastructure to maintain high performance and minimize down time;
• enhancing information and communication systems to ensure that our employees and offices around the world are well-coordinated
and can effectively communicate with each other; and
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enhancing our internal controls to ensure timely and accurate reporting of all of our operations.