Take Two CEO Says FarmVille Business Model Is Unsustainable

The leading executives of one of the biggest publishers in the world of video games has said that the social games market is complicated and that the best proof is the limited performance metrics offered by Zynga, the biggest player in the field.

Strauss Zelnick, who is the Chief Executive Officer at Take Two, stated, “I would argue being the number one player in is complicated, which is why Zynga hasn’t gone public yet because their metrics are sketchy.”

He added, “Zynga is a direct marketing company, 97% of which don’t pay them anything, 3% who do. They churn quite quickly and they get new customers. That is their model. I think they have disclosure issues. I think you are seeing their acquisition costs go up, marketing costs go up and they have very high churn.”

Zynga has been recently accused that it promotes a cutthroat work culture and that there are signs of unrest among the employees.

Some accusations have also been leveled at Chief Executive Officer Mark Pincus, who is said to have reduced the packages of shares given to a number of employees.

PopCap Games, another big player in the casual games market, also said that it has turned down an offer for 1 billion dollars (743.5 million Euro) from Zynga because it had problems with its reputation, including “rescinding share awards and fierce internal competition”.

Zynga has managed to generate a lot of revenue by quickly dominating the social games market on Facebook with titles like FarmVille and CityVille, but it has seen a drop-off in the last few months.

At the moment the company is aiming to launch a record Initial Public Offering of shares during spring 2010.

Other major players in the social games space, like Electronic Arts, have launched games like Dragon Age: Legends and The Sims Online, that have the marketing and mechanics to usurp simpler offerings from Zynga.