Zynga Napkin Math

I wrote this on the Doubloon blog and figured I’d repost here since is was a fun post to share:

Zynga’s in the news again, this time for a leak and some nifty data points. Silicon Alley Insider is reporting that sources inside Zynga place Zynga’s revenue run rate at around 600 million dollars per year. Another source confirms that Zynga is doing well over $1 million in revenue a day. That’s alot of virtual goods sold to (mostly) 29.7 million daily active users (DAU) and 80 million monthly actives (MAU).

Let’s put it all together. Here’s some rough napkin math on Zynga’s numbers then yield some good guide lines for social games looking to make money off virtual goods:

– Roughly $1.60 ARPU per DAU.

– CAC is unknown, but Playfish’s CEO has been quoted as saying CAC in the industry is “practically nothing”. I’ve heard (but can’t confirm) whisper numbers of $.12 CAC, putting the revenue to cost ratio for paid user at 13:1.

– DAU:MAU ratio is .375, which is pretty high for the industry. The general rule of thumb is anything over .15 makes a game sustainable.

– I haven’t yet found solid k-factor numbers around Zynga’s properties, but generally > 1 is considered a win and Zynga’s top properties are considered to be well over that mark.

And there you have it – a quick, very rough 2 minute analysis of Zynga’s model.

This entry was published on May 5, 2010 at 5:31 PM. It’s filed under Uncategorized and tagged , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

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