Rovio said to walk away from billion-dollar deal with FarmVille maker due to reputation of oppressive working conditions.
More so than any other game company, Zynga has capitalized on the ballooning popularity of casual online games, thanks to breakout successes like FarmVille and Mafia Wars. However, the New York Times reports the company's success has been fueled by harsh working conditions, and it may cost the studio in the long run.
Sourcing a handful of employees speaking under the condition of anonymity, the Times' Sunday edition said that CEO Mark Pincus solicited employee feedback last month, with the result being a spate of grievances against the company. These complaints ranged form long work hours to stressful deadlines to overbearing managers.
Over the summer, Angry Birds developer Rovio reportedly walked away from acquisition discussions valued at $2.25 billion in cash and stock, citing concerns over the company's culture. Those conditions were reportedly also a primary factor in PopCap turning down Zynga's $950 million cash bid. (EA successfully picked up PopCap for $750 million in cash and stock, with an additional $550 million in bonuses also on the table.)
The former Zynga employees also said that the company especially needs to fear brain drain as it approaches its oft-delayed initial public offering to be traded on Wall Street. Sources say Zynga's IPO, which analysts expect to come in at $15 billion to $20 billion, has been seized upon by recruitment agencies who hope to lure away top talent following the sale.
"I expect a lot of game and tech companies will begin recruiting Zynga's talent after their equity becomes liquid," EA human resources head Gabrielle Toledano told the Times. "Competitors will make the case that they offer much more compelling opportunities for creative people."
Further compounding the brain-drain dilemma, the Times reported earlier this month that a handful of senior employees were given the option to return a portion of unvested stock or be fired. The move reportedly came as the result of Zynga's IPO, with the company feeling that they had doled out too much stock during its startup window.
Proof that at some point everyone sells out. The more important thing is that they sell out in manner that aids development and doesn't hinder the creative mind.
Aww man.. You mean I won't be able to wait 4 hours/beg my friends/ spend money to fill up my energy bar so I can shoot my third bird?
can you imagine a zynga style angry birds? where you'll need to ask friends to help you out every day, get quests every couple weeks that those of us that are casual players can never finish, or ads that constantly pop up saying to spend money if you want to get better then average items?
If Rovio gets bought up by a big publisher, they'll drain them and have a new Angry Birds game every 2 months for $10. Stay independent Rovio... money isn't everything.
Pop-Cap passed up Zynga because of harsh working conditions but went to EA, the KING of over-worked employees? They don't know what they got themselves into lol.
Never liked Zynga registered than I was 12 to play something and they are still sending me their emails, so &^%$ing annoying. Nothing personal Zynga but you do suck.
All you guys hate Zygna i get that but you are not seeing the bigger picture. When the Angry birds bubble pops(it will eventually)what will Rovi fall back on? I would take that 2.25B and run cause it might never get any better than this. Well that my thought anyway
I could care less about casual games or the whole Angry Birds thing but Zynga losing out on a possible business opportunity is good news. To me there is only one type of casual game that I like: the old classics [Tetris, Arkanoid]
Dear God if the buyout did happen then is a 100 percent chance that the game Angryville would have been released.
@mjc0961 It's not just EA who purchases studios and shuts them down. I believe Activision is worse when it comes to that.
im glad Rovio turned down Zynga's offer. I respect that the CEO/board of directors at Rovio have the morals to not let their employees have to join a company with poor working conditions. More corporate leaders should act in such a manner.
Sounds like Rovio has enough common sense to not board a sinking ship. Zynga is in a dangerous place right now, with their questionable work environment they stand to lose a lot of money VERY fast if they aren't careful to retain the employees that made them so successful in the first place.
@OJdaLIONKing I think u're confusing EA with Activision, if anything EA has business partnerships with studios instead of actually owning them in many cases.
Good for Rovio. I'm not sure if I could walk away from all that money, but it's nice to see a company with some dignity for a change. I don't play that casual online game crap, but the missus does. I've seen her get frustrated with Zynga backed games. Too glitchy and never working properly. But Popcap, she loves their games. Never has a problem with them.
Zynga seems to be the EA of the casual game sphere, and I mean that in the most negative way possible. Good on Rovio for staying independent for the sake of their employees even though they could have had a big payday. I don't mind casual games, except when they threaten to take investment resources away from real games, which seems to be the case as more regular game companies try to get in on the fad. Unfortunately, I don't think this will be a good long term idea for anybody.
CerberusEclipse On Android games/apps are tied to your google account or Amazon account if you use them. You do not have to rebuy your games if you get a new phone.
It's understandable he turned down a $2.25 million offer. Oh, is that a "b"? He turned down a $2.25 billion offer?!? I may hate both companies, Zynga for annoying, exploitive, uncreative rip-offs and Rovio for having an inflated sense of entitlement due to getting one game right, but that's 2.25 billion dollars! There's no way both of their gravy trains are going to last much longer once the fad wears down.
Zynga is great for people who don't want to focus playing games. Its something to do as you stare at a screen. I recently just blocked all my Zynga games because it was starting to turn to a 2nd/3rd job of logging on and doing "nothing". Honestly, those games are addicting for just simply clicking on the screen... I got no beef with Zynga. But this is the first time I heard of sketchy working conditions. I know in the gaming industry, you have to scarifice some sanity to push through a deadline, but not at the cost of health or sanity =P
@Richardthe3rd All I really have are anecdotes (which don't equal data), but of the people I know who play Zynga games, they just do it to kill time at work. The idea of putting actual money into them is an utterly foreign concept. Add in all the horror stories of their employees, and the whole thing sounds like a money pit. I mean, congratulations to anyone who can use buzzwords like 'mindshare' to squeeze huge checks out of investors, but I'll pass. PopCap I can appreciate - they give out demos willy-nilly and then charge devoted fans a modest fee for the full versions. That's a sane business model with tangible income.
Honestly, Zynga appears to be displaying the symptoms of Enron circa the turn of the century. Out of all the news we hear about their earnings and whatnot, Zynga seems to take great care not giving out specific numbers... Next I suppose they'll begin buying out small, unknown companies that only exist because they say they exist.
@Rottenwood Exactly that. Zynga sounds waaay too much like a pets.com kind of company, with overstated assets and inflated goodwill. I think you're probably right; there just wasn't enough cash involved in the transaction. I guess in fast times like these, history repeats itself more quickly. ;)
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