Zynga 2013 Annual Report Download - page 33

Table of Contents
approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and other requirements and we may be
subject to additional regulation and oversight, all of which could significantly increase our operating costs. Changes in current laws or
regulations or the imposition of new laws and regulations in the United States or elsewhere regarding these activities may lessen the growth of
social game services and impair our business. In addition, some concern has been expressed in Europe and in certain countries that social gaming
should be regulated to protect consumers, in particular minors and persons susceptible to addiction to social games. This concern could lead to
the adoption of legislation or regulations that may impose additional burdens upon us, prohibit the offering of our games to certain users or
territories, increase our costs or require changes to our games.
Companies and governmental agencies may restrict access to Facebook, our website, mobile applications or the Internet generally, which
could lead to the loss or slower growth of our player base.
Our players generally need to access the Internet and in particular Facebook and our website to play our games. Companies and
governmental agencies could block access to Facebook, our website, mobile applications or the Internet generally for a number of reasons such
as security or confidentiality concerns or regulatory reasons, or they may adopt policies that prohibit employees from accessing Facebook, our
website or other social platforms. For example, the government of the People’s Republic of China has blocked access to Facebook in China. If
companies or governmental entities block or limit such or otherwise adopt policies restricting players from playing our games, our business
could be negatively impacted and could lead to the loss or slower growth of our player base.
Failure in pursuing or executing new business initiatives could have a material adverse impact on our business and future strategy.
Our strategy includes evaluating, considering and effectively executing new business initiatives, which can be difficult. Management may
not properly ascertain or assess the risks of new initiatives, and subsequent events may alter the risks that were evaluated at the time we decided
to execute any new initiative. Entering into any new initiatives can also divert our management’s attention from other business issues and
opportunities. Failure to effectively identify, pursue and execute new business initiatives, including RMG, may adversely affect our reputation,
business, financial condition and results of operations. We believe RMG could have risks that are different than those associated with other new
initiatives. In particular, RMG is subject to stringent, complicated and rapidly changing licensing and regulatory requirements. Regulatory and
legislative developments, including excessive taxation, may prevent or significantly limit our ability, or the ability of any entity with which we
may partner in the future, to enter into or succeed in RMG. Becoming familiar with and complying with these requirements will increase our
costs and subject our business to greater scrutiny by regulators in many different jurisdictions. If our brand becomes associated with RMG we
may lose current players, advertisers or partners or have difficulty attracting new players, advertisers or partners, which could adversely impact
our business.
In addition, if we or our partners operate our RMG games in a negative manner, if players are less satisfied than expected with the games
provided or if we or our partners fail to comply with regulatory requirements, our reputation could be adversely affected and we may not realize
the anticipated benefits of this line of business or we may lose players and we may curtail our efforts in the RMG market.
Fluctuations in foreign currency exchange rates will affect our financial results, which we report in U.S. dollars.
As we continue to expand our international operations, such as our recent acquisition of NaturalMotion Limited, a company domiciled in
the U.K., we become more exposed to the effects of fluctuations in currency exchange rates. We incur expenses for employee compensation and
other operating expenses at our non-U.S. locations in the local currency, and an increasing percentage of our international revenue is from
players who pay us in currencies other than the U.S. dollar. Fluctuations in the exchange rates between the U.S. dollar and those
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