Pincus returns to helm of Zynga

Zynga founder Mark Pincus is returning to the helm of the digital games company, replacing former Microsoft veteran Don Mattrick who is stepping down as chief executive after less than two years.

Investors did not immediately welcome Wednesday's sudden transition, sending its stock down by 10 per cent in after-hours trading.

Mr Mattrick came to Zynga in mid-2013 at a time when its shares had plummeted to a fraction of their initial public offering price, as the number of people playing its games on Facebook dwindled, with gamers flocking to smartphones and tablets instead.

Despite a short-lived rally early last year, the former Xbox chief failed to revive the stock. Zynga's net losses widened from $37m in 2013 to $226m last year, as Mr Mattrick restructured the company to focus on mobile games, closing studios such as its China unit and making acquisitions such as NaturalMotion.

"He has laid groundwork that will benefit our players and company into the future," Mr Pincus said in a message to employees as the move was announced on Wednesday, by making Zynga into a "mobile first company".

A Zynga spokesperson declined to comment on the circumstances leading up to the abrupt departure of Mr Mattrick, who leaves the company immediately and will return to his native Canada.

The change sees Mr Pincus return to an operational role at the company he founded in July 2007, despite stepping down as its chief product officer - the role he took on after Mr Mattrick's appointment - a year ago. As recently as November he launched Superlabs, a product-development lab akin to an incubator. Throughout Mr Mattrick's tenure, Mr Pincus remained Zynga's chairman and controlling shareholder, with more than 60 per cent of its voting rights.

"I am returning to the company that I love in order to accelerate innovation in the most popular categories like Action Strategy and strengthen our focus on our core areas like Invest and Express," Mr Pincus said, adding that he planned to "intensify our focus on social experiences", suggesting a return to his previous strategy.

Mr Pincus' salary will be $1 per year as well as what his contract says will be a "competitive" annual bonus, depending on performance.

Mr Mattrick will receive a severance package including $4m in cash and almost $15m worth of unvested restricted stock units.

Criticism has grown in recent months of Mr Mattrick, who was well respected in his previous tenures at Microsoft's Xbox and Electronic Arts, the console games publisher, but had little experience in mobile and social gaming.

In February, BTIG analyst Rich Greenfield said in a note that it was "time for Don Mattrick to go" given a strategy that "appears to be all over the place".

Zynga makes most of its money from just 1 per cent of its players, who pay for virtual items and power-ups in games such as Farmville, Words With Friends and Zynga Poker.

Despite its attempts to build momentum in mobile gaming, where it has been outflanked by the likes of King's Candy Crush Saga and Supercell's Clash of Clans, Facebook remains its largest source of players and accounted for just over half of 2014's revenues.

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