Zynga 2014 Annual Report Download - page 40

Table of Contents
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.
If we fail to anticipate or successfully develop new games for new technologies, platforms and devices, the quality, timeliness and
competitiveness of our games could suffer.
The games industry is characterized by rapid technological changes that can be difficult to anticipate. New technologies, including
distribution platforms and gaming devices, such as consoles, connected TVs, or a combination of existing and new devices, may force us to
adapt our current game development processes or adopt new processes. If consumers shift their time to platforms other than the mobile and
social platforms where our games are currently distributed, the size of our audience could decline and our performance could be impacted. It
may take significant time and resources to shift our focus to such technologies, platforms and devices, putting us at a competitive disadvantage.
Alternatively, we may increase the resources employed in research and development to adapt to these new technologies, distribution platforms
and devices, either to preserve our games or a game launch schedule or to keep up with our competition, which would increase our development
expenses. We could also devote significant resources to developing games to work with such technologies, platforms or devices, and these new
technologies, platforms or devices may not experience sustained, widespread consumer acceptance. The occurrence of any of these events could
adversely affect the quality, timelines and competitiveness of our games, or cause us to incur significantly increased costs, which could harm our
operation results.
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, 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
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