IB Net Payout Yields Model

Zynga Improves Results Predictability

The biggest complaint with the recent IPO of King Digital Entertainment (NYSE: KING  ) was the inability to predict future revenue streams. In the case of King Digital, the big hit game of Candy Crush Saga fundamentally distorted future results. If the company and industry can't guarantee repeated success, then the market will have a difficult time providing high valuations to the mobile and social game developers.

In the case of Zynga (NASDAQ: ZNGA  ) , new CEO Don Mattrick made the concept of sustainable franchises a cornerstone of his arrival at the large game developer. It mirrors his past experience at Electronic Arts (NASDAQ: EA  ) , where the focus was on repeatable game franchises that brought in consistent revenue streams in the way of large console hits. The ability to predict mobile and social success is very difficult with the diluted playing field and relatively easy entry.

Read the full article here.

Disclosure: Long ZNGA. Please review the disclaimer page for more details. 


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