How can Zynga diversify outside its current competitive landscape?
Overview of the case
Zynga is a market leader in gaming in social media. It has a market share of 39%, a figure that dwarfs the market share of the company’s competitors. The revenues posted by the company have been attributed to the top three games vended by the company. Additionally, the company has been relying on its integration with Facebook to get its games accessible on social media. There is general concern that such over-reliance is not good for the company in the future. Even though the company is very competitive on this landscape, it is important to diversify. This case looks at how the company can diversify outside its current competitive landscape.
Strategic Alternatives [those emerge from the SWOT]
Strategic Alternatives (pick 3 to 4 from the TOWS)
- Develop its own platform in order to reduce the over-reliance on Facebook.
- Since most of the users of the products are non-payers, the company should diversify into other fields of gaming like casino gaming and gambling.
- The company can also acquire other companies with top games in order to add to its revenue streams
- Increase its research and development in order to ward off competition on the global market and also increase its market share in this market.
Key Evaluation Criteria
- Fit with the company’s strategy, goals, vision and mission [20%]
- Timing: how long it will take to implement the alternative? [10%]
- Competitiveness: what can be consequences of implementing the alternative? [30%]
- Profitability: what can be the rate of return for implementing the alternative? [40%]
Matrix for Analyzing Alternatives
Building the company’s platform would appear to be the best strategic alternative to diversify outside its current competitive landscape. However, the fact that the company has added value to its brand through its integration with Facebook would impede diversification. In order to solve the problem, the company needs to acquire other companies that have top games in social media, and other gaming outlets. This will effectively diversify the company’s competitive landscape (Wi 52). This strategic alternative will also give the company different options in acquisition. For instance, the company can acquire a company that is established in the international market where the company is not fairing well, and more so in the Asian market where potential is still great. Additionally, the strategic alternative can also allow the company the option of acquiring a company in other gaming fields like casinos and gambling thereby adding its revenue streams and enhancing diversification (Huntemann & Ben 28).
Huntemann, Nina, and Ben Aslinger. Gaming Globally: Production, Play, and Place. New York: Palgrave Macmillan, 2013. Print.
Wi, Jong H. Innovation and Strategy of Online Games. Singapore: World Scientific, 2009. Print.