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Mark Pincus started Zynga in 2007 on a vision of social gaming reaching everyone. He guided the company through the free-to-play revolution in games, executed an IPO, and eventually sold it to Take-Two for $12.7 billion.
You would think that he would be happy with the outcome. But along the way to the mass market, Pincus said that social gaming ran into obstacles like the platforms, and it stopped short of fulfilling its destiny of reaching everybody on the planet. Zynga continues to thrive under Take-Two, but Pincus remains interested in seeing technology and gaming move forward.
He spoke with us in a fireside chat at our GamesBeat Summit Next 2022 event last week. I talked to him about why he thinks blockchain could offer a way for the game industry to deliver on the original vision for social gaming — where everybody plays games. His goal is to see that games find the right place, meaning, and value in our daily lives.
Here’s an edited transcript of our fireside chat.
GamesBeat: I think the last time you were on a GamesBeat stage was 2012. I remember we also went over to Zynga to eat at the cafeteria.
Mark Pincus: Probably a lot of people here have eaten our food.
GamesBeat: One of the big things that happened this year was that Take-Two bought Zynga for $12.7 billion. Can you tell us about the sale of Zynga to Take-Two, and what’s your perspective on the macroeconomic environment? How did that influence your decision to sell?
Pincus: Part of the title of the talk was — I think there’s so many interesting parallels between this moment that we’re in in the gaming industry today, and what it looked like in 2007 and 2008. In 2007 when I was getting started in gaming, it was actually mature, not a growth industry. It was not about mass market. There was a lot of consolidation, and a lot of benefits to having scale. It was hard to break in. That’s why, when social networks opened up, it gave this new chance for disruption.
Bing Gordon, who’s here, who’s been a board member and friend, godparent to my kids now, we met around then when he was at EA. We’ve looked at the evolution of the game industry and talked to Frank Gibeau, who’s been CEO of Zynga. We’ve thought that it’s headed toward a place that’s positive, that will probably see a handful or more of $100 billion market cap game companies, those who can get to scale. Zynga and Take-Two together looked like a strong contender to be one of those scaled players. At the same time, it’s arguably never been harder — more money, more time — to break into the game industry. Or it feels as hard to some of us as it was in 2007 and 2008. It’s an interesting moment.
GamesBeat: Were there other, smaller things, like the macro economy? There wasn’t a recession coming when you were talking, but there is one now. Does it look in hindsight like this was a good move in that light?
Pincus: Sure. From a market perspective, the equity markets are a pretty tough environment. It was also a good outcome for Zynga’s shareholders. It positioned both companies — I think it was a real win-win for both companies.
GamesBeat: Earlier this year, when the deal was announced, you said that this was bittersweet for you. Why was that?
Pincus: Well, I think a lot of people here are probably also founders. You set out with this vision of what you want to create, and if you’re really lucky and work hard and everything goes your way, you actually start achieving that vision. It’s a pretty amazing high. And we did, for a moment. I think everyone can remember there was a moment in 2010 and 2011 and 2012 where the vision we had for Zynga was that busy adults, not just people who loved games, but our friends and family would be playing games together, and they were.
The irony of where we are today is that there are more people than ever playing games. The industry is bigger than I ever could have imagined. There are more minutes, more money spent. But we’re not playing games with our friends and family anymore. A lot of the busy adults have gone back to being busy. The games often feel like empty calories and not a good use of your time. Part of the vision that Bing and I worked on was, can a game improve your relationship with someone? Can a game give you a new dimension to express yourself? It’s happening in places like Roblox. But it’s gone away from that place where it was when my mom and my family were doing it.
GamesBeat: We’re staring down at our phones.
Pincus: We’re staring at our phones a lot. But the phones are — it’s questionable how much time they’re connecting us to other people in meaningful ways.
GamesBeat: The platforms, how did they impact the trajectory of getting to the vision of everybody playing?
Pincus: We all have this love-hate relationship with the platforms. I’m guessing Bing could tell us that predates my experience, and probably a long time with EA too. The new platform is this amazing, wonderful thing. It’s magical for developers, for users. When social networks opened up, when we first saw the iPhone, it was this magical thing. All of a sudden there were new dimensions that we could create on. There were so many opportunities everywhere. The users were in a discovery phase. Oh, did you see this? People were sharing.
But as it gets more mature, it both becomes a bigger business, but there tends to be less discovery, less new growth, less interest in new things. The platforms we see, with Apple’s announcement this week, start to tighten the vice a bit. They’re maximizing their revenues. They’re not necessarily motivated to deliver us, as developers, more services. Or even directly to the end users. There’s this weird relationship where we start getting resentful of the platforms we’re on.
GamesBeat: It’s almost like taxation as opposed to some authentic interest they have in games.
Pincus: Yeah, it’s taxation without representation. What have you done for me lately? I should feel good about paying you 30 percent. Imagine if it was opt-in. I used to say to Facebook, too. Imagine if the 30 percent was such a good deal for me as a developer that I wanted it. I didn’t have to pay it. Imagine if Apple gave us so many great things if you paid the 30 percent that you said, shit, I’m happy to pay 30 percent, because I get more distribution. All these cool services that make my games better.
GamesBeat: It sounds like there’s some unfinished business. And now you’re interested in blockchain gaming. Do you think blockchain gaming represents a different opportunity?
Pincus: I think blockchain gaming could be that new level of disruption at the platform level that we’ve been hoping for. Similar, but maybe much bigger than what social gaming was. When I look at the parallels, again, I think that there are more users with wallets today than there were users on Facebook in 2007. And they have wallets. They actually have a way to pay. There’s a model. There’s more margin available for us as developers. We have ways that we could turn that into value for the end users that are completely new and innovative. And there’s more upside.
If you make it as a developer and you create a Fortnite or a hit game, you have the chance to be a platform yourself. Why isn’t there a Tencent of the west? Why is there only a Tencent of China? Well, it’s there structurally, because you’re limited. Fortnite, Roblox, the leaders cannot easily be an app store on top of these platforms. That potential is there on blockchain. But there’s a lot of things missing. There’s no clear, easy distribution compared to what was there with Facebook. We don’t yet have the breakthrough hit games.
GamesBeat: But decentralization and a way around big tech is a real opportunity.
Pincus: Yeah, it could be hugely disruptive.
GamesBeat: What needs to happen for blockchain to get to becoming a mainstream game platform?
Pincus: If I go to — there are three things that we thought about a lot in building our games and trying to get adults to give themselves permission to play, which I really think are possible in blockchain. One is making the virtual feel real. I sent Dean his first copy of Ready Player One. I also sent it to Zuck. I’ll take credit. Minor credit? I tried to buy the movie rights and couldn’t get that. I think we would have made a better movie. Sorry, Steven Spielberg. But one is making the virtual feel real. I think we all see interesting ways blockchain can do that.
The second is a sense of persistence and place. We also see that happening a lot. And the third, which might be less intuitive, is this sense of giving our players and users a way to invest, express, and connect through their gameplay. All those could be in place with the blockchain. And I’d also just say that the way that we build — people forget that the way we build our games in the social gaming industry was not about a single hit game. It was about the underlying mechanics that game brought us.
GamesBeat: We’ve already seen some hits like Axie Infinity rise and fall. It’s subsided now. Can blockchain games be sustainable and get to a mass audience?
Pincus: That gets to the point I’m trying to make. If we freeze frame on where social gaming was in 2007 or 2008, there were these pop and drops. Jetpack Joyride was a gigantic hit game. They got killed by Christmas. People went away for the holidays and came back and forgot to play. No one ever heard of it again. What we see, what each of these games brought in the early days of social gaming, they gave us this new — what Bing and I called the golden mechanic. That’s what I would encourage everyone here to pay attention to.
Scrabulous gave us turn-based asymmetrical gameplay. It blew our minds at the time. I know that sounds crazy today. Playfish, with Restaurant City, gave us this idea that you could hire your friends to play in your game. They built on that asynchronous quality, meaning for the first time I didn’t have to be there at the same time, on the same couch, but I could play with my mom and she could take her turn when she felt like it. Those were such key building blocks even for where mobile gaming is today. Now I see some signs of that.
I saw CryptoKitties in the beginning, and I was blown away. Oh my God, someone actually made an interesting game out of blockchain and a collectible, something people are spending money on besides buying tokens. This feels big. I emailed them and said, I’m blown away, can I invest? I put up some of the first money. Then I’m walking around in my CryptoKitties T-shirt, and Dan, who’s here, and my team, they’re making fun of me. Mark, that’s so 2017. That’s embarrassing. But that team went on to build, as we’ve seen, much bigger things with Flow and NBA Top Shot. Axie is another — they gave us a golden mechanic in play-to-earn. Even though it didn’t sustain, it proved that there’s some real heat there.
GamesBeat: A lot of people also made fun of Axie not being a real game, just like they did with FarmVille.
Pincus: That’s right. I was never asked to speak at GDC. You don’t make games. What are you doing here?
GamesBeat: As far as getting to the metaverse, then, we’ve heard on this stage from Neal Stephenson yesterday. A lot of people have different concepts of what the metaverse is. How do you define it? Where will we experience it?
Pincus: The first thing I’d say about — again, where are we in cycles, economic cycles, capital cycles? This possible web3 and blockchain cycle. It’s such a similar moment. It was very hard to get funding in 2007 and 2008. The first round for Zynga, we were doing $200,000 a month in cash flow, not revenues. We were growing at 30 percent month on month. I can’t tell you. No VC wanted to fund us. Nobody. Finally I got Fred Wilson, who’s just funded everything I’ve done. He begrudgingly gave us money at $15 million pre. That’s an embarrassing safe note today.
The similarity, it’s not that bad today at all. I’m happy that everyone knows that. But I think we have to get pragmatic. Even though we’re going after these big visionary concepts that are super exciting and could be huge, I think the next two years are going to be about pragmatism and actually hunkering down and getting to product experiences and real economies, real experiences that connect the dots and are sustainable and make sense to people other than just the people in this room.
The way I think about the metaverse, to me the metaverse is the build and browse interface on top of this new decentralized infrastructure. That can happen anywhere. Bing and I were at dinner with a bunch of metaverse thinkers. There was the Meta, Facebook point of view, which is that it’s all going to be this amazing future inside your goggles. I think that is amazing, and probably will happen. But I also think we’ll get the metaverse on our phones. It’s already starting through Upland. It’s more about connecting us to this decentralized infrastructure in ways that have real value.
GamesBeat: When do we get to a mass market metaverse?
Pincus: This pragmatism, this real value, we’re kind of in a perfect place. It’s good that speculative bubbles aren’t funding things and everyone has to hunker down, because we have to build some real shit now. That’s good, I think. My lens is slightly different from what I’m hearing from people, which doesn’t mean it’s right. But my instinct is that we’ll get to the metaverse through games first. The way we’re going to prove value to our daughters, our friends who give zero shits about this room and any of this stuff, crypto trading, is by delivering ease and automation. That’s the real unlock here.
In a game, if I’m in Roblox — my kids were addicted to Adopt Me — it gives you this level of ease and automation. You can create a Domino’s Pizza and be a delivery driver, these real life things, but really fast. My daughter Carmen has been trying to build this comfy fancy store for three years, since she was nine. I’m trying my best to just let her do it, not do it for her. I wouldn’t be much better than her anyway. I think, though, what if she got this in Roblox somewhere and it was as easy and fun as Minecraft, Adopt Me, but as powerful as Shopify? It did IRL things, and it was just a natural evolution. I think that’s possible, but I think it has to get to that before she says, “Cool, I’m in the metaverse.”
GamesBeat: I was at a dinner last night, and everyone was talking about generative art, where AI is progressing and all of Silicon Valley seems to be talking about this now. Has that made an impression on you?
Pincus: I’m super excited about what AI can do. My instinct is that we’re going to fake it first before we make it. We’ll do that in games. We’ll build the feeling of bots. Everything Will Wright talked about yesterday is mind-blowing. My guess is we’ll probably get to mind-blowing experiences in a more hardwired way first for people, with a bit more algorithmic, heuristic things before we get to AI. But I think that AI will eventually deliver mind-boggling things.
GamesBeat: Mark Zuckerberg has a vision for the metaverse too, your old platform partner. What role do you think Meta is going to play?
Pincus: I heard that Yat Siu was here, and he told you that he loves how much Mark is investing, and he’s not investing enough. I can’t agree more. It’s awesome and courageous, what he’s doing. We have to at least hand it to him that he is betting it all and withstanding enormous pressure. It might pay off for him. It’s a big, long bet. He could end up being the next coming of Apple, or the next coming of Xerox PARC. Either way it’s good for the industry.
My take, not that he needs my advice at all, is that he’s going to get there if he deeply partners with people in this room, with content creators, in the way he did with Zynga. The platforms are notoriously bad at making games. There’s very few examples, other than a Nintendo, of someone creating a platform and creating the best games and content on it. But that’s what we need.
It’s frustrating being a platform. Steve Jobs grabbed me, hooked his hand around my neck, after I showed FarmVille for the iPhone 4. There were many rows deep of photographers around him. He says, “Pincus! Come here!” He grabbed me and walked down the hall. He said, “When is FarmVille’s art and software and everything going to be native? Don’t you realize the fidelity you could have?” I said, “Well, we’re on Flash. We’re connecting it to Facebook.” He says, “That’s a waste of time! Why are you doing this?” Even Steve Jobs was frustrated that we weren’t using his platform enough. Zuck must be a bit too. Part of it is that he needs to either fall in love with making games or be very close to others who are in love with it.
GamesBeat: I do think that Mark Zuckerberg at least has identified the right competition. Apple is the contender. Once they move into this space, it may be all over for everyone else. With the moves that Apple has been making — the privacy push over targeted advertising, the move this week to basically tax social — they’re competitive moves against Meta to put more pressure on them.
Pincus: Well, they do put more pressure. They could undercut Facebook, Meta. That’s ironic, a little bit of irony, that Zuck is feeling the pain of living on someone else’s platform. He should love even more this idea of a trustless platform where nobody can own or tax anybody.
GamesBeat: The open metaverse is his escape route.
Pincus: Yeah! He should say, “I’ve seen the light! Let’s all do this!”
GamesBeat: Well, he’s saying that the trust issue is a challenging one.
Pincus: We shouldn’t have to trust a platform, a corporation, a founder. True platforms should be completely independent and immutable. They should be driven by developers, end users, and market forces.
GamesBeat: Does this mean we should expect another Zynga from you?
Pincus: I would say that I loved working with small teams and building products and games and trying to figure out emergent new platforms. That’s my life passion. I want to get back to it.
GamesBeat: You’ve done a lot of investing in startups. What advice do you have for investors?
Pincus: I know there are a few investors here too, like Phil Sanderson. I’m an investor in his fund, so go talk to him. For investors, it’s such an interesting time. I’m positive that there will be some entrepreneurs and some companies out of here that become massive. I’ll predict that the winners are going to be a combination — there will be some that get to amazing early traction like an Axie. But more, I would bet on the teams. I would look at that early traction or that product experience, the way I did with Dapper, more as a resume for the team. It’s going to be the teams that have the best ability to execute, learn the fastest, and get the most, best shots on goal, that I would bet end up being the big winners.
I think they could be really big winners. The stakes here — the ones that win go far beyond what was in front of us in social gaming. It’s great that Zynga ended up being a $12-13 billion company, but there is a chance for the Robloxes of the world, or somebody here that cracks this code, to be the next Apple, to be really big companies. I heard Satya Nadella, one of the first times I heard him speak, talk about the new ethos at Microsoft. He said, “To win as a platform, we need to deliver 10x value to everyone on top of our platform compared to what we get.” That’s going to be true here. The winning platform will deliver an ecosystem that’s maybe 100 times more valuable than they are.
GamesBeat: Maybe it’s the mobile Xbox platform.
Pincus: Maybe it’s a $300 billion company that supports a $3 trillion economy.
GamesBeat: What’s your advice to a young person who wants to build a career in the game industry?
Pincus: Put yourself in a position where you get to work on a lot of shots on goal against these emergent areas, where you’re learning really fast. A company that has a lot of growth and a lot of need, that’s going to give you way too much responsibility too early. That’s where Zynga was during the rocketship phase. You want to think, “They’re insane. They should not be giving me this responsibility. I’m not sleeping at night because I’m thinking about that.”