Zynga 2014 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2014 Zynga annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 125

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125

Table of Contents
may cause our employee base to be more vulnerable to be targeted for recruitment by competitors. Some of our employees may have been
motivated to work for us by an expectation that our Class A common stock would be trading at a higher value and may be less motivated by the
equity compensation they receive as a result. Competitors may leverage any resulting disappointment as a tool to recruit talented employees.
Competition for highly skilled employees is intense, particularly in the San Francisco Bay Area, where our headquarters is located. If we are
unable to retain our senior management team and our key employees, are unable to continue to hire highly skilled employees our business could
be harmed. Moreover, if our team fails to work together effectively to execute our plans and strategies on a timely basis, our business could be
harmed.
We have historically hired a number of key personnel through acquisitions, and as competition with other game companies for attractive
target companies with a skilled employee base increases, we may incur significant expenses in continuing this practice. In addition, our recent
operating results, the decline in our revenue and the current trading price of our Class A common stock may negatively impact our perceived
reputation and make it more difficult and more expensive to recruit new employees. The loss of talented employees or the inability to hire skilled
employees as replacements could result in significant disruptions to our business, and the integration of replacement personnel could be time-
consuming and expensive and cause additional disruptions to our business. If we do not succeed in recruiting, retaining, and motivating our key
employees to achieve a high level of success or if we do not attract new key personnel, we may be unable to continue to launch new games and
enhance existing games, including in each case on mobile, expand our network, or execute our business strategy, and as a result, our business
may suffer.
Our core values of focusing on our players first and acting for the long term may conflict with the short-term interests of our business.
One of our core values is to focus on surprising and delighting our players, which we believe is essential to our success and serves the best,
long-term interests of Zynga and our stockholders. Therefore, we have made in the past and we may make in the future, significant investments
or changes in strategy that we think will benefit us in the long term, even if our decision negatively impacts our operating results in the short
term. For example, in early 2013, we decided to discontinue development of certain games that were originally expected to be released in, and
then meaningfully contribute to bookings for, the second quarter of 2013, in order to focus on games with the potential of becoming franchise
games that drive long-term enterprise value. Although these discontinued games may have offered short-term bookings, we determined that they
did not contribute meaningfully to the brand and our strategy in the long-term. In the future, we could make decisions to balance the number of
advertisements we show in games based on consumer reaction to advertising. This type of decision may increase consumer satisfaction and
decrease bookings in the short-term. Our decisions may not result in the long-term benefits that we expect, in which case the success of our
games, business and operating results could be harmed.
An increasing number of individuals are utilizing devices other than personal computers to access the Internet, and versions of our games
developed for these devices might not gain widespread adoption, or may not function as intended.
The number of individuals who access the Internet through devices other than a personal computer, such as smart phones, handheld
computers such as net books and tablets, televisions, video game consoles and set-top box devices, has increased dramatically, and we believe
this trend is likely to continue. Certain of our games or versions of our games may not be compelling to players on such devices. In addition,
each device manufacturer or platform provider may establish unique or restrictive terms and Mobile users also frequently change or upgrade
their mobile devices. Our business and operating results may be harmed if our players do not install our games when they change or upgrader
their device.
To expand our business, we will need to support a number of alternative devices and technologies. Once developed, we may choose to port
or convert a game into separate versions for alternative devices with different
27