What does Zynga see in blockchain?

Zynga this week formalized its interest in the NFT trend by hiring Matt Wolf to be its VP of blockchain gaming.

GamesIndustry.biz has been openly skeptical of the value blockchain brings and critical of the environmental cost the technology incurs, so in speaking with Zynga president Bernard Kim after the announcement, we try to determine exactly what the appeal is for the company and how much it has considered the numerous complications involved with it.

Zygna president Bernard Kim

“Blockchain is something we’ve been exploring, as well as the NFT space,” Kim explains when asked why Zynga is getting into blockchain gaming in the first place. “It’s driven by a lot of our own personal passions. Our executive team is kind of into the space, and then the chairman of our board Mark Pincus as well as [special advisor to the board of directors] Bing Gordon are also super influential to Zynga.

“Although there are varying views on this technology in the future, we are believers that there’s a really strong future with regards to blockchain gaming and NFTs. We’ve had our product management teams explore the space with technologists and engineers and we thought it would be the right thing for us to bring on a vice president and executive to make it their full-time job to focus on the larger strategy, how we integrate this new technology into our portfolio of games, and utilize the assets and infrastructure Zynga has, because we think this is going to be part of our gaming future.”

Given that personal passion, we ask if there are any plans to disclose the executive team and board of director’s personal investment in cryptocurrencies and other blockchain-related endeavors, and Kim confirms there are not.

As for the environmental impact of blockchain, Kim says it’s part of what Zynga is looking at right now.

“We’re focused on maintaining a secure, inclusive, and eco-friendly approach as we enhance this player experience”

“We’re focused on maintaining a secure, inclusive, and eco-friendly approach as we enhance this player experience,” he says. “What our team has researched over time is that this is something really exciting for players. There are your nay-sayers, but there were also nay-sayers around free-to-play and mobile gaming, and those have become pretty important parts of the gaming industry today from where we were ten or 15 years ago.”

Zynga has already said it wants to begin by incorporating blockchain NFTs into the company’s existing games and owned IP.

“We’re still in the exploration stage as well as vetting out all the different ways that Zynga, our properties, could make sense for us in the future. I do think our assets could be highly valuable,” Kim says, suggesting NFTs of Farmville assets or CSR cars as something people might want to own.

“We want to use our infrastructure, our intellectual property, and our assets that we have internally to make sure we have a speed advantage to go into NFT and blockchain gaming,” he adds. “That’s the way we’re thinking it through. We don’t have anything concrete to announce.”

Steam has already said it won’t allow blockchain games on its platform. Apple has booted blockchain apps for violating App Store terms of service, and both Apple and Google’s responses to Epic Games trying to conduct Fortnite transactions without giving the platform holders a cut seem to run counter to the most common proposed implementations of NFTs that could be traded outside of the platform holder’s view.

So is Zynga planning on distributing its games through standard platform holders, or is it preparing to take its games outside of the established ecosystems?

“We definitely have seen how traditional platforms are taking more of a conservative approach, because primarily I think it’s disruptive to their business”

“We definitely have seen how traditional platforms are taking more of a conservative approach, because primarily I think it’s disruptive to their business,” Kim acknowledges. “That’s part of the reason why we hired Matt, for his knowledge and his background to understand the best ways for us to go to market. I don’t have anything to announce right now with regards to what platform choices we’re going to be making, whether that’s direct-to-consumer or utilizing existing platforms we’re on today. But Matt is going to lead that strategy for us.”

There’s also the question of customer service and blockchain ownership taking some measure of control out of Zynga’s hands. It won’t be able to reverse an ownership change if someone owning an NFT is scammed, or technically revoke someone’s ownership for breaking the terms of service in a game. Kim does not answer that concern directly, but does say the company’s experience managing live service games gives it a leg up.

“We deal with concerns, feedback, customer service from our super vocal and passionate game audience,” Kim says. “We manage a whole portfolio of social casino games where there’s a lot of passionate energy with regards to what’s fair in our games. So we actually have a tremendous amount of infrastructure built over a decade over how to service players’ needs.

“That’s another advantage that Zynga might have where we’re not starting from square one trying to build a VIP and customer service team; we already have that built, both externally and in-house. That’s a huge concern because we want to make sure we’re putting player experience first.”

We point out that various games industry companies and trade groups have argued for years that in-game items do not have real-world value in order to thwart legislative efforts around loot boxes or the taxation of virtual goods. So how is the blockchain going to change that?

“Having Matt on board, his expertise and a full-time dedicated team to this, we’ll have more to announce in the future around that topic,” Kim says. “We want to make sure we’re doing what’s right both on a regulatory perspective as well as player experience. We want to make sure we’re doing what’s right and fair in the marketplace.”

And is Zynga then prepared to handle the regulatory challenges associated with every regulatory agency and taxing authority in every market where it does business?

“It’s still early days for the technology as well as for Zynga,” Kim says. “We want to make sure we’re fully prepared. For Zynga it’s not like skunkworks where 20% of your time is spent in this place. We want to have a dedicated team spending all of their time thinking through the challenges you laid out.”

So what are the advances that the blockchain will enable to justify all these additional concerns? What will blockchain let Zynga do in games that it can’t do today?

“One of the things we’re big believers in is scarcity in the marketplace,” Kim says. “There are experiences you have currently in our game that are pretty scarce. Getting that ultimate dragon in Merge Dragons is not something that every player can get to. But then valuing that in the marketplace is something we think is going to be very interesting in the future. Like a player can own something in an experience that no one else can have. That is something that can be very valuable to player experiences, just using that as one example. It’s like having beachfront property in Los Angeles; it’s something not everyone can have, but when you have it, you want to hold onto it for a long time.”

We point out that Zynga owns its games right now, and is perfectly capable of making a unique item and only letting one player have it.

“It’s harder than… The technology around blockchain provides us a lot easier ability to track that across experiences,” Kim says. “In a game I guess you could create that experience but it’s more challenging to track.”

“It’s like having beachfront property in Los Angeles; it’s something not everyone can have, but when you have it, you want to hold onto it for a long time”

So does that mean Zynga is planning to support NFTs from other publishers, tracking experiences from non-Zynga games that would otherwise be outside its view?

“We have nothing to announce as of right now,” Kim says. “It’s something we will continue to explore.”

So how much of its business does Zynga expect to come from blockchain games in the future?

“We haven’t built that into our plans for right now,” Kim says. “When it comes to revenue expectations, that’s not currently in our forecast.

“We’re still in the exploration stage. We feel great about the leadership we’re bringing on board but we don’t have future forecasts in this space.”

Kim’s repeated assertions that the company is just exploring blockchain seem at odds with the hiring of an executive specific to the space, so we ask him to characterize Zynga’s commitment to blockchain gaming.

“Our commitment is shown by our most recent hire,” he says. “We’re excited about the space and there’s going to be more to come with regards to announcing how we’re resourcing it. We want to make sure we’re aligned as an organization around the strategy.”

Finally, we ask Kim what he would say to Zynga players and staff who see the environmental concerns and preponderance of scams surrounding blockchain technology and don’t want it anywhere near their games.

“I don’t have a committed answer to that as of right now,” Kim replies. “Once again we’re in early stages.”