Zynga CEO Pincus steps down, will be replaced by Microsoft Xbox Chief Don Mattrick

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Zynga (NASDAQ:ZNGA) CEO Mark Pincus confirmed that he will step down from his position and will be replaced by Don Mattrick, previously head of Microsoft's (NASDAQ:MSFT) Xbox business.

Mark Pincus and Don Mattrick

Pincus, left, and Mattrick

Zynga's stock rose 10 percent in late-day trading on a report from AllThingsD that Mattrick would take over from Pincus.

The action represents a major milestone for both Zynga and Microsoft. Zynga has been suffering through sagging revenues, executive departures and flagging interest in the company's products among mobile users.

For its part, Microsoft recently announced the new Xbox One console, which will replace the company's aging Xbox 360 in the fall.

"I've always said to Bing (William 'Bing' Gordon, a Zynga director) and our 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. I'm confident that Don is that leader," Pincus wrote in a blog post announcing the news. Mattrick "deeply understands the value of a network and the importance of creating lifelong consumer relationships. He turned Xbox into the world's largest console gaming network, growing its installed base from 10 to 80 million and transformed that business from deep losses to substantial profits. And he has grown the Xbox Live player network from 6 to 50 million active members."

Pincus said he will continue as Zynga's chairman and chief product officer.

"I'm excited to partner with Don and the rest of our team to return Zynga to its leadership role in inventing and growing Play as a core human experience," Pincus wrote.

Just last month, Zynga said it would lay off 18 percent of its workforce, or 520 employees, and would shutter its offices in New York, Los Angeles and Dallas. In the first quarter Zynga's revenue dropped 18 percent year-over-year to $264 million, and Zynga's mobile engagement metrics also took a dive, with daily active users falling from 65 million to 52 million in the year-ago quarter.

Zynga has worked to refocus its business away from Facebook (NASDAQ:FB) and into the mobile gaming space. However, the company continues to face an uphill battle against indie mobile gaming developers, entrenched players like Angry Birds creator Rovio Entertainment and upstarts like Candy Crush Saga maker King. Zynga to date has focused much of its mobile attention on its "with friends" portfolio of games, most recently with its Running with Friends title.

Although Pincus helped grow Zynga into a social gaming powerhouse, he also oversaw Zynga's disastrous $200 million acquisition of Draw Something creator OMGPOP. Zynga reportedly shuttered OMGPOP last month.

For more:
- see this Zynga post
- see this AllThingsD article
- see this letter to employees from Microsoft's Steve Ballmer
- see this TechCrunch article

Related articles:
Report: 'Candy Crush Saga' maker King.com readying IPO
Ex-Zynga staffer torches firm's business strategy in Reddit talk
Zynga guts 18% of staff, shutters offices
Zynga's 'Draw Something 2' fades quickly after strong start

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