The psychology secret to Zynga’s success (now valued at $10 Billion!)

SCap_ 2011-02-23_42OK, so Facebook game maker Zynga is raising additional money at a $10 BILLION valuation. One would hope that that’s enough to make anyone’s ears prick up…

So how did they get here: By understanding something about human psychology, and then HACKING it for all its worth.

1) Addict people with SIMPLE, low learning-curve games, that 2) are social in the way you might have played certain board games in real life in the past, and that 3) have Irregular Reward Schedules (these are the most addicting forms of behavioral reinforcers, read up on your Behaviorism 101…).

THEN, 4) offer them little ways to essentially cheat in the games (making things go more smoothlyfor you), that 5) can be purchased for amounts that fall within the Impulse Purchase threshold, i.e. below the price level where your conscious mind kicks in fully and begins to wonder whether this is really a good idea, asf.

Read the following quote at least 3 times to yourself: “Zynga makes all its money selling virtual goods…Tiny amounts of money make the games progress faster.” (From Business Insider.) If you get it, you’ll know that tons of companies have been neglecting/violating the lessons therein to their considerable detriment.

I just argued yesterday that Sony is making a huge mistake by not going the $1/month route for complete/unlimited streaming music access with their new offering:

Another example that I saw just yesterday: Clever Twitter service “Buffer” ( @bufferapp ), which allows you to in essence do a bookmarklet share to Twitter WITH automatic posting throttling/buffering built-in, so that your tweets are dripped out over time even though you can batch collect them all at once over, say, your morning blog reading hour:

All great, except that they are mispricing their premium levels very badly: 10 tweets in buffer, 3 tweets a day is Free. $5/month for 50 tweets in buffer, 10 tweets/day dripped, and $30/month (crazy…!?) for all unlimited is simply not going to work for them IMO. [See: ]

$5/month is outside of impulse purchase range, while $1/month = Bingo! Sold! At $5, your mind is beginning to ask: Do I really need this? Is it worth it? Can I justify it directly via increased ROI? Where/how am I even going to measure this ROI?

All questions that you DON’T WANT your prospective customer asking at the entry point!! Which is exactly what Zynga has realized so brilliantly, and to such obvious success. The proof of the (psych) pudding is still in the eating… Zynga: “Would you like to improve your position in this game you are already playing for 10 cents?” – Unconscious Mind: “You bet I would.”

Which brings me to another of my pet points about successful online advertising/selling: Offer people only things which make sense in the context of what they were ALREADY doing. In this case, don’t try to offer them after shave, bracelets, or cars while they are playing Farmville, offer them something to do with Farmville!

Disclosure: I don’t play Farmville or CityVille, and have never tossed sheep or vampires at my Facebook friends. I do however study these phenomena very closely… :)

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  • Alan Bright

    Interesting psychology Alex! Makes perfect sense in offering people 'extras' when they are already involved in something. How do you utilise this theory when you want people to buy-in to something they need, but don't know they need?!
    Alan Bright

  • Steve

    How can you really “study these phenomena very closely” if you've never actually played the games?

    I think some of your ideas are solid, but they only really scratch the surface of what's going on in terms of the psychology. When I worked at a competing game company, I was told that Zynga actually invested thousands of dollars into psychological studies to determine what motivates people to do things.

    One of my assignments was to play those dumb Zynga games till I was blue in the face. I think that what they have constructed is full of subtleties you haven't identified, which is why there are hundreds of successful Zynga clones. Because if it was as easy as “make something approachable and allow people to cheat for super cheap”… trust me, Zynga wouldn't be unchallenged in the space.

  • AlexSchleber

    Thanks Alan! As Steve points out below, this is really only scratching the surface re:pricing psychology and strategies, as well as the addicting factors of the Zynga games in general (see more in my comment below).

    Interesting question as to how to apply this for the presumably “noble purpose” you describe. Off the cuff, I'd say two things: First, it is generally dangerous territory to try to ordain what others need. The temptation is to jump to conclusions based on one's own experience and life path, which may not be NEARLY the same as that of another.

    Secondly, and more to your question, I think you can always apply these pricing lessons, and concepts such as “Moving The Freeline” (… ), to your marketing mix, alongside e.g. the Archetype Branding that I advocate. People are either going to resonate with the archetypes of your brand/offering, or they won't. If they do, you want to give them as few reasons as possible to START doing business with you.

    That doesn't mean BTW that there can only be low-cost, compete-on-price offers. But typically, at the entry point, you want to take these “price worry” issues out of the equation, and you'll sell to a whole lot more people on the front-end. THEN, you can position things at premium price points on the back-end.

  • AlexSchleber

    Very interesting comments, Steve, and thanks for sharing your real world experience/insights here. While my last paragraph was obviously a bit tongue-in-cheek, I do think about people's motivation from a wider psychological perspective all of the time. Obviously, this post is merely scratching the surface.

    My posts tend to run too long as it is, so I have to try and keep it to one or two concepts, mainly the price-point psychology here. I could write entire essays on the effects of the Irregular Reward Schedules on Facebook, Zynga games, and Twitter alone…

    Same for the importance of low-barrier/short learning curves, another issue that can drive people away at the entry point: In essence, the motivational psychic energy to participate in a newly discovered game has to be greater than the perceived pain of learning the game. Or any other social media service for that matter (as far as learning the “game” of their UI).

    Now that Zynga is worth $10 Billion or more, one would hope that they've invested at least a few hundreds of thousands, if not millions of $ to keep their addictive gravy train going. :)

    Would love to talk more about this on Twitter or similar sometimes.

    BTW, did you mean to say “why there AREN'T hundreds of successful Zynga clones…”?

  • Badrumsrenovering

    Haha…10 billion…What can I say?

    Crap games that bring $$$ for a lifetime..