Zynga appoints Microsoft Xbox Chief

Following on from an exclusive from AllThingsD yesterday evening, it has been formally announced that President of Interactive Entertainment Don Mattrick will be leaving Microsoft for a position as CEO at Zynga from Monday, 08 July 2013.

Title - Zynga appoints Microsoft Xbox Chief

Mark Pincus, founder of struggling social games company, sent a note to employees, players and shareholders yesterday to outline some important leadership changes: “I’ve always said to Bing and to 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 than Don is that leader… Going forward I’ll continue my role as 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.”

Microsoft CEO Steve Ballmer then sent an email to the company’s employees to inform them of the transition: “Since joining IE8 more than six years ago, Don and his team have accomplished much. Xbox Live members grew from 6 million to 48 million. Xbox 360 became the No. 1 selling console in North America the past 2 years. We introduced Kinect and have sold more than 24 million sensors. We released fantastic games, and, most importantly, we expanded Xbox to go beyond great gaming to deliver all the entertainment people want – sports, music, movies, live television and much more.”

Don Mattrick is set to take over from Mark Pincus at Zynga next week.

Don Mattrick is set to take over from Mark Pincus at Zynga next week.

Unfortunately however, a lot of gamers won’t agree with the first line of that statement above. After his presence at Microsoft’s recent Xbox One events, Mattrick has been on the receiving end of some harsh criticism. Consumers disappointed with the lesser focus on games during the big reveal in May took to various channels to share their displeasure; and Sony won the battle at E3 last month by reaffirming its old DRM policies versus the Xbox One’s new ones. After the conference, Microsoft made a dramatic U-turn over its decision to impose pre-owned games restrictions and online authentication on their next generation console.

It has been reported the move is largely unrelated to the rumoured major reorganisation, and sources say that talks between Mattrick and Zynga have been going on for some time. But the timing is still rather surprising. Microsoft is gearing up for the Xbox One’s launch in time for Christmas and the President of Interactive Entertainment would obviously have been closely involved in this.

Surely Mattrick would have been closely involved with the Xbox One’s launch?

Surely Mattrick would have been closely involved with the Xbox One’s launch?

The destination is equally curious as Zynga has been dealing with some major challenges recently. A number of offices outside of its San Francisco headquarters have been closed; more than five-hundred staff have been laid off; revenue dropped over eighteen percent last quarter; and audience engagement metrics are falling. With Mattrick’s experience of working on turnarounds, the hire would be a massive one for Zynga as Pincus has been struggling to move the company into mobile quickly.

Microsoft could mitigate potentially negative outlooks by positioning such leadership change at Xbox as part of the Xbox One policy turnaround,” said game industry analyst Billy Pidgeon. “Don Mattrick is very talented and could affect powerful changes at many game companies. Zynga would certainly benefit from such leadership. However, even major changes may prove insufficient to turn Zynga around at this point. Zynga has lost too much ground in the social and mobile sectors where smaller competitors have gained significantly.”

As one gamer said: “Man jumps off Hindenburg, lands on Titanic.”

As one gamer said: “Man jumps off Hindenburg, lands on Titanic.”

The obvious theory is that Mattrick was bumped due to the large amount of PR difficulties that have followed the next-generation console. If the sources are correct and he has been in talks with Zynga for some time, he would have either have already worked a long notice period or received a big pay-off. So we have only assume that either Microsoft has known about the move for a while now or the President of Interactive Entertainment received a golden handshake for a job not-so-well done.

Whatever the reason, the news seems to be positive for Zynga so far as their stock price rose 10.4% during the day, and another 2.6% to $3.15 a share in after-hours trading – good but still far below the initial public offering price. Microsoft’s stock dipped slightly, down 0.2%.

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