Can Xbox boss Don Mattrick save Zynga and social gaming?

Mattrick will become new CEO as founder Mark Pincus steps down
  • @jjvincent

Don Mattrick, head of the Microsoft division responsible for the Xbox, has been hired as CEO by Farmville creators Zynga. The company’s founder and current CEO, Mark Pincus, will be stepping down to let Mattrick take his position.

The decision is unexpected but there are plenty of possible causes. Poor reactions to the new Xbox after E3 and Microsoft’s series of U-turns over game DRM and online connection have led to an unpleasant amount of press scrutiny for Mattrick, leaving to avoid that might make sense.

The 49-year-old Mattrick also has a reputation for moving “into organisations that have challenges” – and none could be more troubled than Zynga.

The company that made its money from Facebook-based games such as Farmville recently laid off more than 500 employees, with company revenue falling 18 per cent last quarter. In 2011 the company went public with 100 million shares at $10 each (the largest IPO since Google’s in 2004), whilst shares are now less than $3.

Shares in the company jumped after the news of Mattrick’s appointment, and the decision of Zynga’s founder Pincus to step aside from the top position indicates his strong commitment to turning the company around.

On a blog post on Zynga’s website titled ‘Big Day’, Pincus said: “I’ve always said to Bing [Gordon] 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.”

Despite Mattrick’s recent trouble with the Xbox One, his successes in transforming Microsoft’s Xbox division are undoubted. He joined in 2007 when the console was challenged by both the Wii and the PS2, and introduced the Kinect – which would become the fastest selling consumer electronic device of all time.

Under his leadership the userbase of Xbox Live members grew from 6 to 48 million, the Xbox became the top selling console in the US over the last two years and the entire division finally stopped making a loss.

In an open letter responding to the move, Microsoft CEO Steve Ballmer said: “Thank you, Don, for setting us on a path to completely redefine the entertainment industry.” 

Ballmer's letter was notable for describing the greatest achievement of the Xbox division not as games, or even the Kinect - but as "expanding Xbox to go beyond great gaming to deliver all the entertainment people want."

Bloomberg described the transfer as "moving from steak to Skittles" but there's more similarities than that. As with Xbox Mattrick will be looking at the gaming market from a new vantage. It won't involve creating a new multimedia experience, but will be about tapping an equally misunderstood sector of the industry - social gaming.

As Tim Bradshaw for the Financial Times has noted, Mattrick will have to work hard to turn around Zynga, focusing on two key areas: moving the company's games into the mobile sphere and reducing their dependence on Facebook. If these problems can be tackled though, Mattrick might find just as much steak at Zynga as Microsoft could ever offer.

Update: Don Mattrick has addressed his new employees for the first time, sending out an email to the company's 2,000-plus staff. In it he praises Zynga's combination of "engineering, industry-leading product management and analytics to deliver products that strike a chord with consumers and add real value in their lives."

Read the letter in full over at All Things D.