across the same audience. Taking the same “ville” format and doing it five or six times isn’t as effective.
So, it’s a couple of things. One, the expectations of growth were so high that it really impacted their stock price negatively when they couldn’t deliver. Two, they haven’t really pushed the envelope on innovation. They’ve been accused of cloning other people and “fast following.” At some point, even if you have the scale, fast following is not a market-leading style or approach.
With the number of resources they have, you would expect them to be really leapfrogging and innovating in the space, and building market-leading games versus fast following. But it sounds like the morale and the culture are suffering. The culture there has been highlighted as miserable and toxic, and I think it’s been confirmed—the people you talk to there will tell you they work long hours in a cutthroat environment. Also, with the stock price now in a decline, the company is now below its 2010 valuation. For anyone who joined in the last couple of years, their options are now underwater. So people are leaving like mad. We’re seeing significantly more Zynga interviews.
X: I’m sure you saw that irreverent recruiting video that Kixeye published a couple of weeks ago. In that video they more or less poked Zynga and EA directly in the eye for making cookie-cutter games. But it seems like there’s a lot of bluster in this industry. Are Kixeye’s games all that much more original than Zynga’s? How is Kixeye’s Battle Pirates different from the “Zombie Castle Rescue” game parodied in the video?
DM: Kixeye does a great job. They are innovating in the mid-core space and definitely creating a different genre of game than Zynga is.
But I think the argument could be made that there aren’t that many new game mechanics in the casual game world. A lot of games leverage game mechanics from games that have been around for a while.
Like slot machines—you could [look at GSN’s games and] say “Oh, they’re not really innovating.” But we try to push the envelope in terms of what we are doing there. For example, Crime Scene Slots combines hidden-object game mechanics with a slot machine. That’s never been done before. Bingo Blast combines bingo and a slot machine. So we are innovating in the virtual casino space, versus some people who are just producing very classic slot machines, leveraging the same slot engine and just putting new skins on it. We don’t think that’s very interesting.
X: How much of the original Mesmo team is still on board at GSN?
DM: The original team is all still here, more than two and a half years later, which is a testament to the culture and the environment. Everyone is very happy with the acquisition and where we’re headed as a company.
It’s a really exciting time, actually, even though you will hear otherwise. I love it when you hear things like “Everything is falling apart,” because it discourages further investment from the VC community, and it removes the potential for exits, temporarily. That puts many companies that aren’t on a sound financial footing in a tough place, so it reduces competition and enables us to continue to gain market share. In this environment we’re at a significant advantage because we are well backed and doing well financially.
