In its Q2 2021 earnings report, Zynga has highlighted some uncertainties associated with Apple’s push for greater user privacy through its change to the Identifier for Advertisers (IDFA) and its AppTrackingTransparency (ATT) framework. Despite this, Zynga reported Q2 2021 bookings of $712M, representing a 37% increase from a year ago.
In this article, we will look at the implications of Apple’s initiatives for the gaming industry and analyse Zynga’s earnings report in more depth.
Zynga’s Q2 2021 bookings of $712M are up 37% from a year ago
Zynga Inc. is an American social game developer offering services and products via the internet, including social network games, mobile gaming, and websites. Founded in 2007 as a social gaming destination for players of all ages, Zynga has since grown to become one of the world’s most successful and influential game developers with games consistently topping the iTunes charts. Popular titles include FarmVille 2 and Words with Friends among many others.
Over the past few years, Zynga’s focus has shifted from developing new titles to focusing on analytics and user experience related opportunities to improve user engagement in their existing catalogue of games. This has led to significant investment in cloud computing, data science and monetization solutions for Zynga’s more than 1 billion monthly active users across 187 countries.
At its Q2 2021 results announcement on July 29th, Zynga reported bookings of $712M which was up 37% YoY (year-over-year) driven by strength across key mobile titles such as: Scrabble GO™ , Angry Birds 2™ , Matching with Friends™ , Empires & Puzzles® RPG Quest™ , Golf Clash®, Merge Magic!, Willy Wonka Slots™ and Harry Potter: Puzzles & SpellsTM . During the earnings call however CEO Frank Gibeau expressed some uncertainty related to Apple’s push toward user privacy over targeted advertising with its change to the Identifier for Advertisers or IDFA from February 2021 which impacted monetization across much of their mobile portfolio during May/June resulting in lower incremental performance due to lost advertising revenue though offset partially by higher user revenue mix as players turned towards in-app purchases for monetization.
Overview of Apple’s push toward user privacy
Apple’s push toward privacy for users over targeted advertising is thought to have contributed significantly to Zynga’s 37% increase in Q2 2021 bookings from a year ago. In addition, Apple made several changes to their Identifier for Advertisers (IDFA) that has resulted in reduced advertiser targeting and disrupted the mobile gaming industry as a whole.
Apple’s changes, which rolled out in iOS 14, are part of its ongoing commitment to providing user privacy across the App Store. Apple began requiring app developers to ask users for permission to track them with IDFA, the identifier that app makers use to target advertisements. As a result of having to seek permission from each individual user and given consumer perceptions of online privacy, this has caused some uncertainty around the ecosystem of game developers’ ability to monetize their games via targeted mobile advertising.
This is most likely why Zynga reported lower than expected performance marketing numbers in Q1 2021 — marketers’ inability to target ads due to Apple’s IDFA restrictions affected user acquisition costs and KPIs such as lifetime value (LTV). However, with its mature relationship with app stores and robust franchise portfolio that consists of existing titles such as Words With Friends and strategic partnerships like Harry Potter: Puzzles & Spells that managed through the IDFA changes successfully enabled by strong organic reach, those got boosted enough performance which lead gamers up 37 percent year-over-year for the Q2 2021 bookings.
Impact of Apple’s Changes on Zynga
Apple’s recent Identifier for Advertisers (IDFA) changes have caused some uncertainty for Zynga, a social game developer. Apple’s move away from targeted advertisement, which it had previously allowed for mobile gaming, raised some questions about the impact it would have on Zynga’s bottom line.
In its Q2 2021 earnings report, Zynga reported that its bookings of $712M were up 37% from a year ago, but it acknowledged some uncertainties due to the Apple changes.
Zynga’s response to Apple’s changes
In response to Apple’s changes, Zynga has been quick to action. Following the release of these changes, Zynga has made strategic efforts to cope with the new environment. These include adapting and increasing the focus on their owned-and-operated user acquisition and monetization models, sourcing out third-party attribution sources as a solution for user attribution, and setting up ‘pilot’ campaigns with alternative ways of targeting users.
The immediate impact of Apple’s change can be projected through a shift of ad spend away from iOS towards other platforms. As such, they lean on ‘experimenting’ with alternative methods such as building on traditional performance platforms with more sophisticated ads (Dynamic Ads) and increasing collaboration between developers and app marketing partners. For example, interactive ads have been used by Zynga for more than two years now which enable higher engagement rates due to players being able to sample games before downloading them.
These measures have already shown signs of success for Zynga Q2 2021 bookings of $712M representing a 37% year over year growth from Q2 2020. However, it is estimated that this could return back to pre-iOS 14 levels following further optimization modifications occurring by the company to market its products and services across different advertising channels better than before – or even better than they were previously able to do through the use of Identifiers for Advertisers (IDFA).
Potential impact on Zynga’s advertising revenue
One of early headlines to emerge from the U.S. Tech giant Apple’s announcement to commit towards user privacy was the potential impact on Zynga’s already blossoming advertising revenues. Since Q2 2021, Zynga has recorded a 37% growth in bookings which stands at $712M, derived mainly from mobile advertisement campaigns thanks in large part due to their game titles like ‘Words with Friends’ and ‘FarmVille 2’ strategically placing the company within the Top 5 grossing gaming apps category on both Google Play and App Store.
Before Apple’s change to its Identifier for Advertisers (IDFA) and introduction of App Tracking Transparency (ATT) framework, advertisers who used Apple’s stack for attribution had access to personalised user metrics such as demographics, device model, etc., but all that is set to be overshadowed by features like SKAdNetwork which banks mainly on probabilistic estimation of interests instead of identifying them directly from a user’s mobile device. The ramifications don’t just stop at reduced targeting capabilities for advertisers since CPM rates are also poised to tumble due to this shift away from personalization-driven marketing campaign expenditure models by said companies across platforms like Zynga.
Regardless, there is still light at the end of this uncertain tunnel for companies located in the app-environment space thanks to improved consumer trust which promises further opportunities on revenue pools beyond advertising – namely subscription services being one key revenue option they can focus their efforts towards while navigating past what is statistically expected lower conversion rates triggered by Apple’s changes regarding privacy standards; along with superior user data protection ensuring users are more comfortable sharing personal information mandated when making certain in-app purchases or registering an account with a specific application platform like Zynga.
Zynga’s Q2 2021 Results
Zynga Inc., the world’s largest social gaming company, reported strong Q2 2021 bookings of $712 million, up 37% from a year ago.
The company noted some uncertainties related to Apple’s push toward user privacy over targeted advertising with its change to the Identifier for Advertisers. Zynga’s Q2 2021 results will be closely watched for further indications of the impacts of Apple’s changes on the tech and gaming space.
Overview of Zynga’s Q2 2021 bookings
Zynga’s Q2 2021 bookings totaled $712 million, a 37 percent increase compared to the same period in 2020. A balanced portfolio of game content and growth in stable franchises such as Words With Friends, Empires & Puzzles and CSR Racing 2 supported the strong performance. Additionally, average monthly unique players and Average Revenue Per Paying User (ARPPU) achieved all-time quarterly records.
However, Zynga noted some uncertainties related to Apple’s shift away from targeted advertising with its change to the Identifier for Advertisers (IDFA). The company also expressed concerns about how the impact of COVID-19 could affect consumer spending habits over the coming quarters. However, management said it believes it is well positioned should these events turn out to be true long-term trends.
Overall, Zynga’s Q2 2021 performance was strong due to its diverse suite of high quality titles which enabled it to quickly adapt and respond when consumer demand shifted due to COVID-19. Despite facing market uncertainty related to Apple’s IDFA changes and potential consumer spending impacts from COVID-19, Zynga achieved record bookings for Q2 2021 and is looking forward with optimism and confidence in its content pipeline.
Analysis of Zynga’s Q2 2021 bookings
Zynga’s Q2 2021 bookings were reported as having a 37% year-over-year increase, reaching $712M as of June 30th, 2021. This is an impressive achievement given the uncertainties the industry faces in the face of a global pandemic.
The strong performance was largely attributed to a significant growth in bookings around Zynga’s core franchises such as Words with Friends, and Zynga Poker. This suggests that the company’s user engagement increased significantly over the past year, with users flocking to these titles during their time at home due to lockdown restrictions imposed by various governments worldwide.
However, given Apple’s recent push towards more stringent user privacy regulations related to targeted advertising and its change to the Identifier for Advertisers (IDFA) on iOS devices, industry insiders fear that this shift may adversely impact Zynga’s revenue model moving forward. In addition, IDFA improvements are expected to limit advertiser abilities in collecting data and targeting users effectively, which may hinder future advertising efforts across Apple devices. Only time will tell how Zynga adapts its business model in reaction to these changes.
While Zynga initially experienced some uncertainty related to Apple’s move to user privacy, the company has managed to expand its presence in the social gaming space.
In its Q2 2021 earnings report, Zynga reported a strong 37% year-over-year booking increase, reaching a total of $712M. This marks a significant rebound from the pandemic’s start, when the company experienced steep declines in its financial performance.
Summary of the impact of Apple’s changes on Zynga
The impact of Apple’s changes to its Identifier for Advertisers (IDFA) and App Tracking Transparency privacy settings on Zynga’s Q2 2021 revenue was not completely clear. However, in the company’s earnings call, Zynga CEO Frank Gibeau noted that “some uncertainty does remain around exact business implications, over the coming quarters, for our advertising and user acquisition results, due to Apple’s upcoming requirements and their likely impact on both the ad priced we receive and, perhaps more importantly, the size of the mobile addressable market.”
Despite this uncertainty around specific impacts in their Q2 performance, Zynga noted strong results in its quarterly bookings of $712M—representing an increase of 37% over Q2 2020. The company attributed this growth to various factors, including innovating new mechanics that drive engagement such as loyalty currency in Merge dragons! and new social features in Words with Friends. Additionally, tech-enabled content intelligence capabilities are helping drive higher quality titles through a faster process.
Lastly, scaling both experience products across multiple genres allowed Zynga to capture a larger percentage of player time in the category by making products across every genre from strategy combat titles like Empires & Puzzles to simple “time-passer” experiences like Toon Blast.
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