Zynga Partying Like It’s 1999

By Noel Bagwell
June 19, 2009

Usually local news broadcasts have little national relevance. In the case of Channel 5 News out of San Francisco, that generality doesn’t always apply, as this clip will show you. If you’re not familiar with Zynga, you probably aren’t on Facebook. If you’re familiar with online games like Mafia Wars, Dragon Wars, or Zynga’s Texas Hold ‘Em Poker app, you’re probably familiar with them because of their prevalence on Facebook (and MySpace).

What Zynga bases its revenues on are “microtransactions,” which occur when lots of people pay small amounts of money for virtual (or real) products, usually online. The idea is, that if you are, for example, playing a video game, you’ll pay a small amount of money for a little “bonus” or “power-up” in the game. In Zynga’s Texas Hold ‘Em Poker game, you can buy chips in various amounts. In Dragon Wars, you can buy “Favor Points” which can be used to give you various advantages in the game. Each of these “microtransactions” are very small, but when you add them up, they add up to a tidy sum.

Those tidy sums have made Zynga a multimillion-dollar corporation that, apparently, cannot hire fast enough and has perks that were commonplace back when the “dot-com bubble” was in full effect, but which, now, are extremely rare in all but the largest of companies (like Google and Microsoft).

What is mind-boggling to me is that successful video game developers, like Blizzard Entertainment, have been so slow to adapt their business model to incorporate microtransactions. There has been some interesting discussion, for some time now, about the pros and cons of games like World of Warcraft incorporating microtransactions into their gameplay experience. They’ve done a little bit, in terms of implementation of paid character customization, but it is extremely basic, and arguably quite over-priced. In truth, there is an argument that could be made that what Blizzard is doing with World of Warcraft is not really microtransactions, because the amounts of money Blizzard charges aren’t really small enough to be considered microtransactions, but that’s a debate for a different article.

It remains to be seen MMORPGs will adapt to the prevalence, generally, of microtransactions in online gaming, but I think the new Star Wars: The Old Republic MMORPG will probably introduce microtransactions to the MMORPG community on an unprecedented level – at least, that’s the word on the street.