Take-Two CEO sips on the haterade, says Zynga's 'metrics are sketchy'

You'd think gunning for a sweet $1 billion and the top spot among video games' largest publishers would be fun. Well, not for FarmVille maker Zynga: Not only is the media after the 4-year-old company, but so is everyone else. The next big timer to "be hype"--as the cool kids say-- is Strauss Zelnick, CEO of Grand Theft Auto publisher Take-Two Interactive. During the Reuters Media Summit in New York, Zelnick openly questioned Zynga's business model, casting doubt over whether it can make good on investor expectations as it quickly approaches an initial public offering (IPO).

"I would argue being the No. 1 player in (social gaming) is complicated, which is why Zynga hasn't gone public yet because their metrics are sketchy," Zelnick said to Reuters during a talk. "I think they have disclosure issues, I think you are seeing their acquisition costs go up, marketing costs go up and they have very high churn."

Zelnick was likely referring to the company's frequent amendments to its S-1 filing with the US Security and Exchanges Commission since it filed for IPO early this summer. His words also seem to allude to the 14 some companies Zynga purchased in a single year, which helped it amass nearly 3,000 employees worldwide. Finally, Zelnick could have been talking about how quickly the CityVille creator has lost daily players recently. (What a loaded statement, huh?) We can't wait to see who else gets "jelly"--that's cool now too, right?

Everybody, start your engines: Zynga will go public on Dec. 16 [Report]

Did you remember your enormous salt shaker? Good, because Reuters reports that Zynga, everybody's favorite social game maker, will make its stock market debut on Dec. 16. According to Reuters, the CityVille creator will look to raise $900 million, a hair down from the almost unanimously-reported $1 billion that will bring its valuation to $14 billion.

But hey, that's still right on par with the most valuable games company in the West, Activision Blizzard. (Of course, Reuters cites "a source involved in the process.") Zynga will reportedly ask between $8 and $10 a share on the Nasdaq under the ticker ZNGA--a fairly noticeable one, no? However, Reuters does confirm that Zynga will start its roadshow next week to spur investor interest.

That is, if investors can look past the recent torrent of reports and quips that don't paint the prettiest picture of the company behind FarmVille. The New York Times allegedly revealed that Angry Birds maker Rovio turned down a $2.25 billion offer from the company, while a recent Wall Street Journal report seems to have exposed quite the stock scandal within Zynga. Worse yet, players are apparently leaving in droves. It's time for Zynga to shift into third gear: That $900 million is atop one giant hill.

Would you ever invest in Zynga at such a price? Do you think the company could at least become the second most valuable games company in the US?

Social game makers Gree, DeNA to take spotlight at Tokyo Game Show

Social games will go toe to toe with the hardcore scene at this year's Tokyo Game Show, Reuters reports. Gree, the 26 million player-strong mobile and social games creator hailing from Japan, will have one of the largest booths at Japan's equivalent of E3 this year, according to Reuters. In fact, both Gree and its competitor DeNA will conduct keynote addresses at the event, which runs Sept. 15 through 18.

Reuters reports that several game companies aside from DeNA and Gree, including famed creator of games like Contra and Castlevania (some of the most hardcore franchises around) Konami, are shifting resources toward social games. While the biggest Japanese games company, Nintendo, lags behind as it continues to focus on games created deliberately to take advantage of its hardware. Unfortunately, that hasn't been working out so well for the company as of late.

"Nintendo has done some pretty awful things - no software, poor pricing, poor PR, no sign of a sustainable turnaround, software support dropping like flies," JP Morgan analyst Hiroshi Kamide told Reuters, referring to the failed 3DS launch (and resultant massive price drop).

On the other hand, competitor Konami recently welcomed over 10 million players to its social games. "You can make serious returns with social games in Japan if done well - and that is exactly what they have done," Kamide said to Reuters about Konami.

Both DeNA (which enjoys 3 million more monthly players than its rival) and Gree have major ambitions of becoming global competitors in the social games space to companies like Zynga and EA, which have blazed the trail for Facebook and mobile social game in the western world. Just this past year, both Gree and DeNA made huge purchases to make global headway in the space with mobile social game network OpenFeint and mobile games developer Ngmoco, respectively.

Just as some social game makers invaded this year's E3 event in the states, it looks like the ballooning sub genre will fill up the streets of Tokyo this week, too. Whether the two companies will fill the conference halls with hot air has yet to be seen. But considering Mitsubishi UFJ Morgan Stanley analyst Masato Araki expects Japan's social games industry to grow to about 400 billion yen ($5.1 billion) by 2013 from 106 billion yen in 2011, according to Reuters, you can bet everyone will be all ears.

Do you think Gree and DeNA will have some new, interesting things to say about social games at this year's TGS? How do you think traditional Japanese gaming companies will respond? Sound off in the comments. Add Comment