Zynga revenues radically outstrip FarmVille creator's expectations

On eve of reported IPO, revenues more than double what Zynga expected one year ago, according to confidential business plan

Zynga, the company behind popular social networking game FarmVille expected to float this week, is achieving off-the-chart growth with revenues apparently already more than double what it expected to generate just one year ago, according to a confidential business plan seen by the Guardian.

The company expected to triple growth in revenues from $581m (£363m) last year to $1.5bn in 2015, according to the business plan, dated May 2010.

But the company, which is reportedly on the verge of floating 10% of its shares in New York, may already have achieved its 2015 forecasts if information reportedly shown to investors is correct.

According to a recent report in the New York Post, the San Francisco-based company had told investors it expects to generate $1.8 bn this year alone, yielding $630m in profit.

It is expected to launch around 10% of the company on the market as part of a $500m financing round.

The 2010 business projections, seen by the Guardian, show the company expected worldwide revenues of $816m this year; $1.016m in 2012; $1.3bn in 2013, $1.43bn in 2014 and $1.5bn in 2015.

More than half of the revenue was forecast to be generated in the US with most of the non-US revenue coming from western Europe.

The figures in the 2010 business plan show the phenomenal success of the gaming company, which only launched four years ago. The company's CityVille is the biggest game on Facebook followed by FarmVille, which between them have more than 130 million players. In the US, FarmVille players outnumber real farmers by five to one.

Across the world, the company claims to have 215 million active users a month and all eyes will be on the company when it floats.

Last year it was valued at $5.5bn, making it the world's second-largest gaming company behind Activision Blizzard. But the latest valuations are in the $15bn-$20bn range.

Although there are fears of a new dotcom bubble, Zynga's appeal is that it has tapped into a lucrative method of making money online by selling gamers virtual items such as seeds to produce crops in FarmVille and virtual cash to construct buildings in CityVille.

It has also developed lucrative revenue streams through sponsorship and partnerships. Last month Lady Gaga teamed up with the gaming company to launch her new album. She gave an early listen to a track, Born This Way, to FarmVille fans who completed a special task on her speciality farm GagaVille.

And last year, in the first deal with a physical retailer, it partnered with US chain 7 Eleven to create special products such as a Mafia Wars Slurpee and FarmVille vanilla ice cream. Gamers could buy the virtual confectionary and win a voucher for real goods in 7,000 participating stores, with 7 Eleven getting a cut of the revenue generated in Farmville.

The virtual-goods market is seen as one of the most remarkable innovations in social networking because it actually makes money – the virtual market is expected to more than double to $20.3bn in 2014, according to ThinkEquity LLC.

A spokeswoman for Zynga declined to confirm or deny the figures, saying it never comments on revenue.


Lisa O'Carroll

The GuardianTramp

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