Citing "Material Weakness In Financial Reporting," Zynga Files An Amended S-1

Zynga just filed an amended S-1. Usually this kind of thing happens after the SEC asks a company to clarify its filing on some details. We think that's what happened here. It doesn't look like anything drastic is in here…certainly nothing on par with the amendments Groupon made yesterday. The changes:

On Page 63, Zynga goes into new detail on its revolving credit facility.

On Page 30, Zynga says it's re-doing the way it amortizes virtual goods purchases made by gamers in the past.

On page 2, Zynga added: "Our top three games historically have contributed the majority of our revenue. Our top three games accounted for 93%, 83%, 78% and 63% of our online game revenue in 2008, 2009, 2010, and in the first quarter of 2011, respectively."

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Zynga Is Trying To Buy Draw Something, The Hottest App In The App Store (ZNGA)

Zynga, the makers of FarmVille, are in talks to acquire Draw Something developers OMGPOP, according to sources familiar with the matter. This is basically Zynga's M.O. — it spends a lot of money acquiring smaller game studios to build games that appear to have traction. When it fails to buy those studios, it will usually create a copycat game, which is called a "fast-follow" in the industry. Given the interest in OMGPOP, expect a pictionary-type game to come out of Zynga soon enough — whether it is Draw Something or a fast-follow from Zynga. Kim-Mai Cutler over at TechCrunch first reported the story, which we had confirmed with sources close to the discussion. We first reported Draw Something has reached 20 million downloads in a little under 5 weeks, and it's one of the hottest apps on the App Store right now. It's already eclipsing Zynga's most popular mobile game, Words With Friends. When briefed on the story, Zynga did not comment. Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:10 Million People Play This Game Every DayFormer Yahoo Engineer Is 'Embarrassed' By Patents Filed In His NameGoogle's Obsession With Facebook Is Wrecking The Company, Says This Former Engineer

Zynga's Chief Engineer Has Resigned (ZNGA)

Neil Roseman, Zynga's VP of Engineering, has resigned after 15 months with the company, reports All Things D. He last oversaw the launch of Zynga's games platform at Zynga.com, internally codenamed "Project Z," which let people play games through the site instead of through Facebook. Roseman said he was spending three to four days a week in San Francisco and was looking forward to spending more time with his family in Seattle. He's not sure where he's headed next, but plans on doing something entrepreneurial. Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:OMGPOP's Founder Was So Excited About His Company's ~$200 Million Sale To Zynga He Almost Got Himself KilledHow OMGPOP Founder Charles Forman 'Grew Up' And Became A Multi-MillionaireOMGPOP Engineer Refuses To Join Zynga, Calling It 'Evil'

10 Million People Play This Game Every Day

OMGPOP's Draw Something app, which is less than two months old, just blew past Zynga's Words With Friends to become the most-played Facebook-connected game on a daily basis, according to AppData. As with all explosively popular apps, expect one of two things to happen: a larger social gaming company (we're looking at you, Zynga) will make a move to buy OMGPOP, or someone will quickly come out with a copycat app. Draw Something now has more than 10 million players accessing the app on a daily basis, according to AppData. Players have downloaded Draw Something more than 20 million times, and the game brings in six figures in revenue on a daily basis, we reported earlier. Success like this isn't unheard of in the App Store. But it's still quite a sight to see when it does happen. (Nice catch by Kim-Mai Cutler over at TechCrunch.) Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:The Social Gaming Market Will Explode To $5+ Billion By 2015CHART OF THE DAY: Social Gaming Will Be A $5 Billion Market By 2015Mark Pincus Says Online Gambling Is A 'Natural Fit' For Zynga's Games

Zynga's Next Blockbuster Is A 180 Degree Turn From Their Tried-And-True Strategy

Zynga's next big hit is called Pioneer Trail, a sequel to a previous hit FrontierVille.  The interesting part about the game, as Kotaku points out, is that it takes a radically different tack from Zynga's previous game: it limits the number of friends you can have in the game. To three.  The way Zynga games normally work is that the whole point is to get you to invite as many friends as possible to join up so that the games can get as many users as possible.  So this is the opposite strategy, playing for depth instead of breadth.  It's worth pointing out that this possibly isn't a change of strategy for the whole company. Zynga is made up of plenty of semi-independent studios that make their own games (although with the Zynga style) and, of course, like many web companies, it may be that they're just trying something out.  In any case it's interesting and we're curious to see how it pans out.  Don't Miss: How Zynga Makes Millions Off A BlockBuster Like CityVille → Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:Zynga Rumored To Be In Talks With The Angry Birds GuysZynga's GM Leaves To Become eHarmony's New CEOCiting "Material Weakness In Financial Reporting," Zynga Files An Amended S-1

Zynga's Scary Deal With Facebook Is Actually Fine

The Zynga IPO is coming and, with it, questions. Is the business sustainable? Or is Zynga a flash in the pan and going to fall by the wayside? What does its dependence on Facebook mean? To find out, we spoke with someone who knows the business in and out: Mathieu Nouzareth, who co-founded two social games companies, Weka Entertainment and FreshPlanet. FreshPlanet is based in New York while Weka is publicly traded in Paris. (Keep in mind Nouzareth is in the industry so he has an interest in talking it up. That being said, he has no interest in Zynga itself.) Here's what we learned:

Social gaming is very profitable. The reason why Zynga isn't so profitable is probably through a combination of having to invest a lot (e.g. in their own datacenters) and the special way virtual goods revenue is recognized (over time). But over the long run it's going to be very profitable.  Facebook's scary deal with Zynga is actually fine. Nouzareth tells us "I wish I could" trade an exclusive over games with minimum unique users, and that people in the industry "suspected" Facebook and Zynga had a deal like that. And, "Facebook and Zynga need each other. Like China and the US." So Facebook won't kill Zynga.  Zynga is going to grow beyond Facebook. It's not just Google+. Zynga is doing very well on the iPhone after struggling for a while.  Zynga's competitors are doomed. Big companies like EA and Disney bought Zynga's competitors, and they don't know what they're doing. Traditional games are products, and social games are services, and that means they work completely differently. The games companies can only hope to catch up "in their dreams and fantasies." In reality, Zynga's king of the hill for a long time.

Vostu Strikes Back In Lawsuit Against Zynga → Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:It's Obvious Why Zynga Wanted PopCap So BadlyZynga Breaks Into China With New Version Of CityVilleThis Profitable, $100 Million Revenue Startup Doesn't Want To Go Public

Zynga Assumes You Won't Play Its Games As Long As You Used To

Cory Johnson reported for Bloomberg West last night, pointing out that Zynga doesn't expect people to play its games as long as they used to. He also calls the company on unusual accounting practices, saying, "The revenue recognition of Zynga has made Zynga look like a very different company than it is." Watch:

Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:WHOOPS! Kleiner, Fidelity, Morgan Stanley, And T. Rowe Price Just Blew Themselves Up In ZyngaHere's Who Cashed Out Of Zynga This YearIT'S OUT: This Is Zynga's IPO Road Show Presentation

A Microsoft Co-Founder's $40 Billion Mistake (MSFT, AOL)

Microsoft's co-founder Paul Allen got an opportunity to invest in AOL back in the early days, but he says in his memoir that Bill Gates talked him out of it, arguing that Microsoft would crush AOL. What that stake ended up being worth? $40 billion. Whoops. This nugget comes from a fairly scathing Times review of Allen's autobiography, and we'd missed that. Of course, this assumes that Allen not only would have invested but would have known when to sell. And Allen is already so rich that he doesn't know what to do with his billions. But it still has to hurt. Don't Miss: 10 Crazy Stories About Bill Gates From Paul Allen's Book → For the latest tech news, visit SAI: Silicon Alley Insider. Follow us on Twitter and Facebook.Join the conversation about this story »See Also:The Woz Slams Paul Allen As A Patent TrollWHOOPS: HP Exec Spills Huge Company Secret On LinkedIn ProfileAOL's Display Ad Business Actually Grew Last Quarter!

Why Are So Many Big Financial Players Chasing Web Startups?

Groupon's huge, almost billion dollar financing isn't even closed yet, and we already have the names of some of the investors. Alongside previous investors like DST some names raised our eyebrows: megabank Morgan Stanley and Fidelity, a pension fund. Big financial players going after web startups isn't exactly new, but it seems that it's a trend that's on the rise. Morgan Stanley invested in Twitter's Series D round that valued the company at $1 billion. The last time Fidelity invested in a web startup that we know of, it was Slide, alongside T Rowe Price and at a $500 million valuation, before the company was acquired by Google for a disappointing $182 million. And before that was Legg Mason in Ning, another company that seems to be having trouble.  While Morgan Stanley is a big bank with fingers in every pot, and a long history in technology, it's a bit startling to see strait-laced pension funds like Fidelity investing in young web startups. Now the instinctive response in many people is to cry "BUBBLE!" -- and that's generally been a good instinct. That being said, this new breed of web companies are actual businesses -- that are growing like literally nothing we've seen before. Slide failed to generate the returns its investors expected, but the thesis behind the company, that there's money in Facebook apps and virtual goods, has been proved staggeringly correct by Zynga. Ning is in the midst of a turnaround and might still become a big business. Meanwhile Twitter and Groupon are on an absolute tear. Morgan Stanley's investment in Twitter at $1 billion looks prescient now that the company has raised money at $3.7 billion. And Groupon is on a $2 billion gross merchandise sales run rate only a few years after inception. These companies are growing much faster than eBay, Amazon or Google did at the same age. If we were in a populist mood, we'd say these online businesses are much more "real" than the mirages big financial players poured trillions in before the financial crisis. We think it's another sign of the internet finally turning into the internet -- becoming big enough that huge new businesses can be built overnight. In any case, it's interesting to watch.Join the conversation about this story »See Also:Here's Why DST Won't Invest In TwitterHere's Why Women Will Drive The Future Of The Internet (And What The Internet Is Turning Into)Ok Groupon, Here's What You Do Now

Zynga Is Launching Its Own Social Network

Want to measure your social-media marketing impact? Check out the Social Media Analytics conference, the best place to learn about measuring and amplifying your ROI. What's your strategy?Zynga just announced its own social networking/gaming platform: Zynga Direct. The first component of Zynga Direct is a sign-in platform codenamed Project Z. It will launch later this year. Zynga Direct is a more general name describing Zynga's new direct-to-consumer strategy. The idea is that you can play Zynga games outside of Facebook, and across multiple platforms -- like Facebook to mobile. One of Zynga's biggest risks is that it is almost entirely owned by Facebook. It has to give Facebook a cut of all its virtual goods revenue, and its success is reliant on Facebook. It sounds like a problem, but so far it's been working for Zynga. Still, it makes sense for Zynga to establish its own platform and try to own the users. Zynga isn't ditching Facebook entirely for its Direct platform. It will still use Facebook Connect. Zynga has been working on Direct for two years now. Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:The 100 Most Valuable Startups In The World, Revamped And Revised!Zynga's Mafia Wars 2 Is On Google+CHART OF THE DAY: Zynga's Biggest Problem