Inside Zynga: Now the Creators of 'CityVille'

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Started in 2007, the CEO said Zynga grew out of what he described as the need for a website that was about having fun.

"I saw a lot of sites that had fulfilled, I think, the original promise of the Web for us, which was that we should get utility, we should save time and save money. I think we were ready for the next generation of the Internet," Pincus said. "If you think of this as turning the Web into one cocktail party, it's giving them something to do together while they're at the party."

And people have flocked to Pincus's party. According to Appdata.com, an independent application traffic tracking service, Zynga has 202 million monthly active users -- 44.5 million of whom play its games on a daily basis.

The company is best known for its game "FarmVille," available on Facebook and as an App for the iPhone and the Android phone systems.

Players manage a virtual farm by planting, growing and harvesting virtual crops and rising virtual livestock to rise through the levels of the game, earning virtual currency called "farm coins" along the way. Players can buy and trade virtual crops and livestock to build up their online farming world.

"Farmville": Full of Fun and Controversy

"A key to social games is that your mother and your nephew and your college friend all find that game accessible to them, and so it has to have rules that one understands. No one has to tell you the rules of farming," Pincus explained. "A lot of social gaming is about self-expression and so 'FarmVille' in a way is like this Etch-A-Sketch that you can come back to everyday and draw a new picture and then visit your friends and see what they did."

Zynga has found a pattern of success in similar games like "FishVille," "PetVille," "FrontierVille," and "CafeWorld" -- all of which center on an action and reward system that encourages players to purchase virtual goods with a credit card in order to move through game levels faster or to purchase special items that are unavailable to non-paying players.

"This is actually one of the cheapest forms of entertainment that the world has ever seen. Our games are free games. You can come play our games and most users play and never spend any money," he said.

But according to Sharepost Inc., an estimated 2 to 3 percent of "FarmVille" users -- 5 to 10 million people -- do use their credit cards to buy virtual goods, a key concept to Zynga's business model.

"For some users who are very engaged ... they're happy to spend money -- less than a Starbucks coffee -- to have a decoration on their game board," Pincus said. "I think that [buying] virtual goods is a very affordable pastime and form of entertainment, much less money than taking your family to a movie. So I'm not surprised that it's grown into a real industry, and I do think you're going to see it continue to grow worldwide. That's how we make money."

There have been reports of people who have become so hooked on "FarmVille," that they've gone into credit card debt or spent their savings to purchase items for their virtual farm. Some have even become violent.

In April, a 12-year-old British boy made headlines after his mother discovered he racked up an astounding $1,300 bill on her credit card with charges from buying items for "FarmVille" on Facebook.

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