Zynga 2014 Annual Report Download - page 14

Table of Contents
laws may be interpreted and applied in conflicting ways from state to state, country to country, or region to region, and in a manner that is not
consistent with our current data protection practices. Complying with these varying international requirements could cause us to incur additional
costs and change our business practices. Further, any failure by us to adequately protect our players’ information and data could result in a loss
of player confidence in our services and ultimately in a loss of players, which could adversely affect our business.
With the move of our services to mobile devices, we are also subject to additional regulations regarding communication via this channel,
such as the Telephone Consumer Protection Act (“TCPA”). The interpretation of many of these laws, including the TCPA, and their application
to current means of communication through mobile devices is unclear and in a state of flux. These laws may be interpreted and applied in a
manner that is not consistent with current industry practices. The costs of compliance with these laws may increase in the future as a result of
changes in interpretation and may greatly reduce our ability to contact our players through this channel. Furthermore, failure on our part to
comply with these laws may subject us to significant liabilities.
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. European regulators are also considering the efficacy of
existing consumer protection laws as they relate to protection of consumers for the purchase of virtual items in applications including game
applications. These concerns 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. These concerns have already led to
certain changes in Apple and Google policy and could lead to additional changes.
Also, because our services are accessible worldwide, certain foreign jurisdictions have claimed and others may claim that we are required
to comply with their laws, including in jurisdictions where we have no local entity, employees or infrastructure.
Separately, we have a partnership agreement with bwin.party to develop, test and operate certain real money online poker and casino
games in the United Kingdom. The real money games are powered by the established operating platform and software of bwin.party and operate
under bwin.party’s gambling licenses in the applicable jurisdictions.
Seasonality
During fiscal year 2014, approximately 22% of our revenue was derived from advertising and other. Advertising budgets are generally
highest during the fourth quarter and decline significantly in the first quarter of the following year, which affects the revenues we derive from
advertisements and offers in our games. Additionally, we generally experience increases in game downloads and resulting online games
revenues in the fourth quarter and first quarter corresponding to increases in smartphone and tablet purchases during the holiday shopping
season.
Employees
Our future success depends upon the continued service of our key technical and management personnel and upon our ability to continue to
attract and retain qualified employees, particularly our senior management team and highly skilled game designers, product managers and
engineers. We currently have favorable employee relations, but the competition for technical personnel is intense, and the loss of key employees
or the inability to hire such employees when needed could have a material adverse impact on our business and financial condition. As of
December 31, 2014, we had 1,974 full-time employees.
11