Don Mattrick shows his poker hand for turning Zynga around in mobile (interview)

Seven months into his tenure as chief executive of Zynga, Don Mattrick is making some bold moves.

Today, he is announcing three major mobile titles based on Zynga flagship franchises Words With Friends, FarmVille, and Zynga Poker. A month ago, he agreed to pay $527 million for NaturalMotion, the publisher of hot mobile titles like CSR Racing and Clumsy Ninja. Many executives have left the company in recent months and Mattrick is replacing them with his own picks, like chief operating officer Clive Downie.

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The turnaround is a tough one, as Zynga missed big opportunities bridging the gap from social games to mobile. It turned a profit last year — but a small one. It has shed hundreds of employees, including many seasoned developers. The company is shutting its YoVille game even though it still has loyal fans. And it still isn’t anywhere near its goal of dominating the mobile charts the way it once reigned on Facebook.

But Mattrick believes that the hits will come as Zynga doubles down on five major game brands and takes more creative risks. In an interview, he reminded us that more than a billion people have played Zynga games in the past six years, including 400 million that have played FarmVille. Here’s an edited transcript of our interview. (Also see our analysis of Zynga and previews of Zynga Poker, Words With Friends, and FarmVille 2: Country Escape).

GamesBeat: From your perspective, it feels like you guys are being gutsy with some of your game-design changes.

Don Mattrick: The first thing we’re trying to do is accomplishing more progress in the passage of time. We’ve doubled down on important things that our company should be doing to support our aspirations for the business that we want to become.

We’re trying to make sure the company becomes a content leader in free to play. We’ve been building stronger teams. We’re paying more attention to consumer research. We’re spending time thinking about how our experiences are differentiated relative to the competition. We’re trying to be thoughtful about the opportunity, which is, “Hey, we should be creating experiences in categories that we know consumers love.”

As you know, in entertainment, the top 20 in any category account for more than 50 percent of the profit pools that are available. We’re fortifying, committing, and building capabilities to create hits that show up in the top 20.

We’ve created an opportunity for a company like Supercell with Hay Day by not bringing FarmVille to mobile, building an iOS and an Android version that works online and offline, building an economic model where you can have trading between the Web and mobile versions, innovating on the game design, making it performant on those mobile devices. That’s what the team’s been doing now. I’m pretty excited about it. The testing has been well-received. What did you think of it?

GamesBeat: FarmVille 2 definitely translates a lot of those improvements over to mobile. With Zynga Poker and Words With Friends, it almost seems like you guys want to disrupt yourselves before someone comes to disrupt you, especially on mobile.

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Mattrick: Here’s what we’ve gotta do. We’ve gotta overdeliver value to consumers, in any product category where we are. That’s the job. As time passes, our teams get more capable. They learn more from having an audience. We get an opportunity to give two things: things that are proven, that people love, and things that are innovative, that add to the surprise and delight of the experience. Those are the things the teams are executing on. They’re doing it in a thoughtful way.

The good news is, from an investment standpoint, those results are showing up in our financial measures. We expect that 2014 will be a year of growth for the company. I’m pretty excited about that.

GamesBeat: One of your guys said he was excited about the creative confidence that the company now has. You’re willing to take some risks, like changing up a poker game that’s working really well.

Mattrick: From being in the entertainment space for a long time, we should be aspiring to create. We should be aspiring to be great. The more time you get to participate, the more time you get to perfect your craft. We’re adding more art, more intuition, more consumer research, and at the same time, we’re building on some of the science of running great app-scale live services. We’re blending those things together.

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GamesBeat: It seems challenging to try to do that when you have a lot of executive turnover and employee downsizing as well.

Mattrick: A big part of that I’m actually pushing on and leading. I audited the management team when I joined. I asked them, “What do you do? How are you making people better? What do you want to create over the next three years?” The people who didn’t have a great answer to that question, they aren’t here anymore.

The people who are here are energized. They think it’s a privilege to create. We’ve been dealing with core issues of our business, getting our resources and capabilities allocated first on content, second on running a great set of experiences, building tools and technology, and then having our support functions be driven by world-class individuals more than large groups of people. We’ve increased accountability. We’ve made things more discrete.

I love some of the new people that we’ve brought in, like Clive Downie. He’s been doing this for 20-plus years. I had a chance to work with him at EA. He was driving Ngmoco and DeNA for the last six years in the mobile space. There are multiple examples of new people who’ve come in. They’re excited about the industry space. They have a provocative point of view. They’ve created billion-dollar successes before in multiple franchises. People are now starting to frame up what’s possible.

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You probably read the King filing. Pretty amazing results. If anything, it demonstrates the accelerated growth in our category, the size of the profit pool, and the size of the opportunity that’s there. We’ve been under-indexing. We’re now closing some of that gap. We have hard work to do, but we’re making material progress each quarter.

GamesBeat: It seems like you’re always one game away from a blockbuster. How do you feel about taking more shots on goal?

Mattrick: I’m super excited. Zynga, in its first five years, accomplished things that most companies don’t get to — a billion dollars in revenue, a billion dollars in operating income, and touched a billion consumers in the first five years. Now, when you look at it, the company in its peak year generated $393 million in earnings. At some point in the future, I’d like us to get to that level and beyond.

We’re going to do that in two ways. We’re going to nurture proven hits, things like FarmVille, Poker, social casino, Words With Friends. And we’re going to create new ones. We’ve added what I think is the best independent creative group on the planet with NaturalMotion. Have you spent time with Torsten Reil and Barclay Deeming [of NaturalMotion]?

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GamesBeat: Torsten mostly, yeah.

Mattrick: He’s the real deal. Oxford graduate, spent time studying how motion occurs, broke it down into a physics problem, a neural-learning problem, and an animation problem. He wrote tools that showed up in Lord of the Rings. He started translating that to the PC and console space. He wrote the tech pipeline that powers Grand Theft Auto, that showed up in GTA IV and V and Red Dead Redemption.

Then he started shipping mobile products. With the few at-bats that those teams have had, they’ve been able to ship things that have charted number one. They have kept all of that tools and tech expertise for exclusive use in the mobile space. That gives us a point of differentiation, an ability to create things that are important and valuable to consumers. We now have five categories — cars, people, farming, poker/casino, and Words With Friends.

GamesBeat: It almost seems more like an expansion than a doubling down.

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Mattrick: It is an expansion of capabilities. When you see the things that NaturalMotion has shipped, here’s the word that most consumers usually share: “Wow.” They’ve been able to drive a tremendous amount of installs just through people seeing someone else use it. They haven’t had to spend a ton of money on cross-promotion or advertising to get a big consumer base.

Candidly, could they have built tighter game loops? Could they do a better job of retention and engagement and reward? Sure. They’re learning about the art of creating games. Torsten is a leader who’s committed to excellence and to always learning new skills. I saw how we could influence and accelerate what we were doing at Zynga and what was going on at NaturalMotion.

We went through a very thoughtful diligence process. Both Torsten and myself came away excited about the opportunities that putting our two businesses together meant. If anything, post-deal I’m even more excited about what the future holds.

GamesBeat: It’s almost like Nintendo buying Epic Games or something like that.

Mattrick: Yeah, that’s one way to think of it. Even more than how it manifests itself to me, what I really thought about was passion and a sustainable difference. It’ll be really hard for other companies to replicate what 40 people have been focused on for 12 years. Their core tools and tech group has been writing and rewriting that pipeline for a long time. That brings value unto itself.

GamesBeat: Do you feel like, in seven months, that some of your changes and your personal stamp on the company are becoming visible?

Mattrick: I do. We’ve got a stronger executive team. They’re closer to the details. There’s more focus, more rigor. It’s showing up in increases in consumer satisfaction, higher quality levels. People are being more disciplined about innovation. It’s starting to show up in our financial results. I was able to share, on our last earnings call, that we anticipate 2014 to be a year of growth, where we can continue to post better results over each quarter.

I’m really pleased with what the team’s accomplished. They’ve made more progress in the passage of seven months. That acceleration is energizing to be a part of.

GamesBeat: I looked at the YoVille decision, and that seemed to capture a lot of the difficulty of the business right now. You have an installed base of people who are used to games that are more historical.

Mattrick: We have a whole mix. The company started early inside of this category. We shipped lots of hits that people love. We appreciate our audience being engaged. We’re learning how to support and nurture different communities. At the same time, at a certain point in time, you have to move on to new products and new experiences. We’re trying to find the right balance with that.

I appreciate any consumer who gives their time and supports our products. We’re trying to always over-deliver value to them with everything we do.

GamesBeat: How do you look at the transition you’ve made, from running one game business at Microsoft to running a very different business here? You have virtual goods and advertising as part of the main business model now.

Mattrick: Here’s what’s consistent in the frame: consumers and competitors. I’m taking all the knowledge I learned about what things surprise and delight consumers, how to build teams that are world class — that can execute against those insights — and how to make sure that your work is better or unique relative to your competitors. That’s the journey that we’re embarking on, with an aspiration to the app-scale Western leader.

People are learning about the free-to-play category, whether it’s on the desktop or on mobile devices. People are opting in and validating that games are the number one use case scenario on that class of devices. Zynga and our teams are learning how to blend the art and science of what we do — and do it in a more effective way.

What I’ve seen in the past is that if you get core groups of people, if you empower them and nurture them and constructively challenge them, they’ll achieve more than they dreamed was possible. Our teams are going through that journey. It’s fun to see. I’ve personally enjoyed it, whether it was at Electronic Arts or Microsoft. … With any luck, we will eventually go through that journey and be the clear industry leader at some point in the future. That’s why I’m here.

GamesBeat: I interviewed John Riccitiello at our GamesBeat conference. One of the things he suggested was that the console playbook may very well play out in this new space of mobile and social at some point. Brands are going to be very important. You’ll see something like Call of Duty, where it’ll be number one or number two every year. It’ll just be some other brand in the mobile space occupying the top spot year after year. Do you agree with that?

Mattrick: People who are selecting into our category are staying, playing, and paying more. That trend originally showed up in Asia. We saw the same thing in the console space. The second thing is, the top 20 hits are staying in those positions for longer. John is insightful to identify that those trends are occurring.

It’s a deliberate act, to have multiple hits and run an organization at scale. It takes a lot of time, a lot of discipline, and you have to be committed to learning new skills and innovating each and every day. That’s the culture we’re trying to build.

We’re blessed at Zynga, because we have five categories of products that live in the top 20. NaturalMotion brings two with Clumsy Ninja and CSR and then Zynga with FarmVille, Poker, social casino, and Words With Friends. We have more potential. We have a lot of work, but I’m excited about the progress that we’ve made to date. It’ll be fun to share at the event on Monday. We’re rolling those products out all at different times in the month of March in at least one geography around the world. I know it’ll be public soon. I’m proud and pleased with the work that our teams have done.