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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:

  • Focused on only top games on Facebook
  • For each game, pulled DAU numbers on first of every month since 1/1/09 from Developer Analytics.
  • To get the average DAU for each month, took the average of the first of the month and the first of the following month. So for March, the average DAU for the month is the average of DAU on 3/1 and DAU on 4/1.
  • Inside Virtual Goods published a monthly ARPU range (low and high end) for each game genre. In general, we used the average of low and high, with some exceptions:
    • 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
  • Mapped each game to its game genre, and multiplied average DAU each month with the ARPU.

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.

16 Responses to We estimate Zynga revenues around $270M in 2009 and $240M in 2010 YTD

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