Zynga 2013 Annual Report Download - page 28

Table of Contents
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 much larger and more well-established markets and may be perceived
by our players to offer greater variety, affordability, interactivity and enjoyment. These other forms of entertainment compete for the
discretionary time and income of our players. If we are unable to sustain sufficient interest in our games in comparison to other forms of
entertainment, including new forms of entertainment, our business model may no longer be viable.
Competition in our industry is intense.
Our industry is highly competitive and we expect more companies to enter the sector and a wider range of social games to be introduced.
Our competitors that develop games for networks, on both web and mobile, vary in size and include companies such as DeNA Co. Ltd. (Japan),
Electronic Arts Inc., Gameloft SA, GREE International, Inc., Glu Mobile Inc., King.com Inc., Rovio Mobile Ltd., Supercell Inc., GungHo
Online Entertainment, Inc., Kabam and The Walt Disney Company. In addition, online game developers and distributors who are primarily
focused on specific international markets, such as Tencent Holdings Limited in Asia, and high-profile companies with significant online
presences that to date have not developed social games, such as Facebook, Apple Inc., Google Inc. and Microsoft Corporation, may decide to
develop social games. Some of these current and potential competitors have significant resources for developing or acquiring additional games,
may be able to incorporate their own strong brands and assets into their games, have a more diversified set of revenue sources than we do and
may be less severely affected by changes in consumer preferences, regulations or other developments that may impact our industry. In addition,
we have limited experience in developing games for mobile and other platforms and our ability to succeed on those platforms is uncertain. We
expect new game competitors to enter the market and existing competitors to allocate more resources to develop and market competing games
and applications.
Our revenue may be harmed by the proliferation of “cheating” programs and scam offers that seek to exploit our games and players affects
the game-playing experience and may lead players to stop playing our games.
Unrelated third parties have developed, and may continue to develop, “cheating” programs that enable players to exploit vulnerabilities in
our games, play them in an automated way or obtain unfair advantages over
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currency exchange rate fluctuations;
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protectionist laws and business practices that favor local businesses in some countries;
• double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United
States or the foreign jurisdictions in which we operate;
• foreign exchange controls or U.S. tax restrictions that might restrict or prevent us from repatriating income earned in countries
outside the United States;
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political, economic and social instability;
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higher costs associated with doing business internationally;
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export or import regulations; and
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trade and tariff restrictions.