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Zynga chief replaced by Xbox boss

02 July 2013, 14:32

San Francisco – Zynga's co-founder Mark Pincus on Monday said he is handing over the helm of the struggling social games company to Microsoft entertainment division chief Don Mattrick.

Word that videogame industry veteran Mattrick would be in command of San Francisco-based Zynga beginning next week sent shares climbing more than 10% to $3.21.

"I've always said (to the Zynga board) that if I could find someone who could do a better job as our CEO, I'd do all I could to recruit and bring that person in," Pincus said in a letter to employees.

"I'm confident that Don is that leader."

Last month, Zynga announced that it was cutting nearly a fifth of its staff as it refocuses on games for mobile devices.

Zynga has been pulling the plug on unpopular games and investing in titles for play on smartphones or tablets, as well as its own online arena at zynga.com.

Zynga rose to stardom by tailoring games for play by friends on Facebook. But the two firms have grown apart in the past year as Facebook develops new revenue streams and Zynga seeks new consumers.

Mattrick was recently at the centre of backlash against Microsoft over plans for new-generation Xbox One consoles to require internet connections and put restrictions on playing second-hand game disks.

About two weeks ago, Mattrick announced in a blog post that the US technology titan had aborted the plan in the face of outrage by gamers.

Wedbush Morgan analyst Michael Pachter deemed it "bad timing" for Microsoft to have Mattrick leave just months before the release of a new-generation Xbox console out to be the heart of internet age home entertainment.

Microsoft said it will charge $499 for Xbox One consoles when they are released in the US and Europe in November.

That is the same month that Japan-based rival Sony will release a new-generation PlayStation 4 console at $399.

Microsoft chief Steve Ballmer said that he will directly oversee Mattrick's team, in what many considered a sign that the departure was unexpected.

"It's a big deal for Zynga; it's a big deal for Microsoft, and it's a big deal that Electronic Arts is not getting him," Pachter said.

"Mattrick is a great hire; I think he will work fine."

Industry had suspected that Mattrick was going to move to US videogame titan Electronic Arts.

Ballmer praised Mattrick and bade him good fortune in an internal memo sent to workers at the Redmond, Washington-based technology titan and posted online.

Since Mattrick joined Microsoft's interactive entertainment team more than six years ago, Xbox 360 has become the top selling console in North America and membership in the Xbox Live service has grown eight-fold to 48 million.

"Thank you, Don, for setting us on a path to completely redefine the entertainment industry," Ballmer said in the message.

Mattrick was to be formally introduced to Zynga employees at an 'all-hands' meeting on Tuesday.

"I joined Zynga because I believe that Mark's pioneering vision and mission to connect the world through games is just getting started," Mattrick said in an email message to Zynga workers that was shared online.

"Zynga is a great business that has yet to realise its full potential."

Zynga, which was founded in 2007, launched games such as CityVille, Words With Friends and Zynga Poker that run on Facebook and other platforms.

Zynga games are free to play but the company makes money by selling virtual in-game goods to players and serving up advertising.

"Zynga is in need of some fresh blood to invigorate its leadership team and Mattrick would certainly make a formidable fit," said Tech Savvy analyst Scott Steinberg.

"Zynga acquires a name-brand executive with proven experience to expand in the increasingly online and mobile game world," he continued.

"While Zynga has been going through a tough patch, compared to what might be in store for the console world this may prove to be a smarter move for Mattrick in the long run."

Zynga hit the stock market with a billion-dollar listing in December of 2011 by offering 100 million shares – one seventh of the company's total – at $10 a pop.



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