This is a guest post by Jeremy Liew, a managing director at Lightspeed Venture Partners where he invests in the internet and mobile sectors. His investments include Flixster, Living Social, Playdom, Rockyou and Shoedazzle. He blogs at lsvp.wordpress.com.
There has been a lot of speculation about Zynga’s revenue. Last week Business insider said:
Zynga, the social gamesmaker behind Farmville, has a revenue run-rate around $600 million, a source close to the company tells us. Another source confirms that Zynga is doing well over $1 million in revenue a day.
Businessweek says:
More than 120 million people play Zynga’s online games. Employee headcount has almost quadrupled in the past year, to 775. Revenue for the three-year-old company should surpass $450 million in 2010, according to two people who have been briefed on its financials.
We thought that we would estimate Zynga’s revenue ourselves by looking at publicly available info. Here is what Linus Chung and I did:
- For virtual gifts, we used the high end: $0.50. This only affects Friends for Sale.
- For simulation games (e.g., CafeWorld, PetVille), we used the low end: $1.00. These games have been wildy popular in terms of users. We assumed that the recent increase in users results in lower monetizing users being added.
- For poker, we used the low end: $2.00
- For FarmVille, we estimated ARPU at $0.50 due to its scale
This estimate is likely to be inaccurate for many reasons, notably (i) the coarse estimates of revenue/DAU (rounding to the nearest 50c), (ii) the low end of range estimates for many of Zynga’s most popular games, and (ii) the fact that we ignore revenue from MySpace, Zynga’s websites, and mobile. None the less, it shows some interesting results:
Again, note that these are all estimates. However, our estimates show that revenue ramped fast over calendar 2009. The H1 ramp was driven by Poker and Mafia Wars, and the H2 ramp driven by Farmville, Cafeworld and Fishville. Our estimates show that revenues have been flatish since the beginning of 2010, with a decline in older games compensated for by the launch of Treasure Isle.
Feel free to see the details and play with the assumptions yourself – the spreadsheet is here. It is a read only Google Doc so that your changes won’t affect others who are later to check it out, but you can download the spreadsheet to change assumptions. Note that there are four tabs to the spreadsheet (at the very bottom of the page). To download, click File–> Download as –> Excel.
Play with the assumptions, and let us know what you think.
Zynga was founded in July 2007 by Mark Pincus and is named for his late American Bulldog, Zinga. Loyal and spirited, Zinga’s name is a nod to a legendary African warrior queen. The early supporting founding team included Eric Schiermeyer, Michael Luxton, Justin Waldron, Kyle Stewart, Scott Dale, John Doerr, Steve Schoettler, Kevin Hagan, and Andrew Trader. Zynga’s mission is connecting the world through games. Everyday millions of people interact with their friends and express their unique personalities through our...
Jeremy Liew is a Managing Director at Lightspeed Venture Partners, joining the firm in 2006. He invests primarily in the Internet and mobile sectors with a particular interest in massive-scale social media, commerce, gaming, financial services, and methods for increasing monetization. He was named to Forbes’ Midas List in 2011 and 2012. Previously, Jeremy was with AOL, first as SVP of corporate development and chief of staff to the CEO, and then as general manager of Netscape. Jeremy joined AOL...
Lightspeed Venture Partners is an early stage venture capital firm with teams in Menlo Park, China, India, and Israel. Lightspeed focuses on investments in enterprise infrastructure, internet media and commerce, mobile, digital media and cleantech. Past notable investments include Nicira, Fushion-io, Playdom, Kosmix, Pliant Technology, Brocade, Blue Nile, Ciena, DoubleClick, Phone.com, and Riverbed. Current Investments include: AppDynamics Boundry Delphix Bonobos GrubHub Lemon Living Social Kixeye Nest Embrane MapR Technology Nimble Storage Nutanix DataStax Tintri The Honest Company Snapchat Shoedazzle TaskRabbit Virtual Instrument Revel Touch Pertino Whisper Outbrain StitchFix
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