Zynga is still preparing its IPO for some unspecified date, but Take-Two CEO Strauss Zelnick cautions investors on jumping in. At the Reuters Media Summit, Zelnick said that Zynga’s metrics are “sketchy” and questioned if the publisher’s business model is solid.
"Zynga is a direct marketing company, 97 percent of [users] don't pay them anything, 3 percent who do," said Zelnick. "They churn quite quickly and they get new customers. That is their model."
Zelnick wonders if it's time to harvest his crops in Farmville.
"I would argue being the No. 1 player in (social gaming) is complicated, which is why Zynga hasn't gone public yet because their metrics are sketchy," Zelnick continued. "I think they have disclosure issues, I think you are seeing their acquisition costs go up, marketing costs go up and they have very high churn.”
Zelnick also slammed Zynga’s run of high-profile acquisitions, saying that Take-Two would never go the same route.
As it heads towards an IPO, Zynga’s had a rough time in the media. Is the commentary well-deserved or just growing pains for a company about to jump into the deep end?
