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Analyst: #Zynga Paying More to get Playing Players Than They Spend

January 23, 2012

So says this article:

[analyst Arvind] Bhatia’s estimate is based on the company’s confirmed $120 million marketing budget for the first nine months of 2011.

“Almost all of that is for acquiring customers,” he said in an interview with Benzinga. “We also know that they had 3.4 million unique payers in the September quarter, which is up from 3 million at the end of December 2010.”

“In other words, they added 400,000 additional payers and they spent $120 million to acquire them.”

The figures indicate that each new customer costs Zynga $300 to acquire, but each one will only spend and average of $150 over the 12 to 15 months that players stay with the company. “That math won’t work for very long,” Bhatia added.

This strikes me as a little of a back-of-the-envelope calculation, as I’m sure there is more to the numbers than that. Nonetheless it is a worrying set of numbers. Read this, if you’re interested with my comments and links of social games going into 2012 (here & here).

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