UPDATED: Microsoft's Xbox Head Leaving Company to be Zynga's CEO
July 1, 2013 2:21 PM
Some believe he was actually fired for his Xbox One statements
Microsoft's Xbox Head, who has made some
regarding the new Xbox One, is reportedly leaving the Windows giant for a top spot at Zynga.
Don Mattrick, the president of Microsoft’s Interactive Entertainment Business, will leave Microsoft to take on a position at social gaming company Zynga -- possibly as CEO. His new spot at the company is expected to be announced as soon as today.
For Zynga, this could be a great move. The company has had troubles ever since its initial public offering (IPO) back in 2011. It filed its Form S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) on July 1, 2011 and began trading December 16, 2011 at $10 per share. However, stock fell throughout 2012, hitting as low as $2.27 per share by October.
One of Zynga's core problems is that it's having a hard time taking on the mobile space. Its Web business has been declining faster than expected, and its mobile efforts aren't enough to fill the gap. Also, its
casual, social games
don't seem to have long-term viability. It has had to axe 18 games in recent months -- including PetVille, FishVille, Mafia Wars 2 and Vampire Wars -- due to reduced popularity (and to make room for new games).
Just last month, Zynga was forced to
lay off 18 percent of its workforce
(about 520 employees) by August 2013. The latest layoffs will affect all parts of the
social gaming company
, and it will even have to close its offices in Dallas, Los Angeles and New York. However, it will save the company about $70 million to $80 million.
With Mattrick at the helm, who will work closely with Zynga's current CEO Mark Pincus, the gaming company could turn things around.
Mattrick has been at Microsoft since 2007, but lately, he has proven to be a bit of a controversial figure at the company. When gamers learned of the new Xbox console's -- Xbox One -- new "always-on" digital rights management (DRM) system, many expressed anger toward the idea. Not everyone has Internet access at all times, meaning that the new system would pose a problem for many gamers who are either in rural areas with slow connections, travelling or experience Internet issues with providers.
When gamers lashed out about the new always-on issue, Mattrick advised that they
don't buy an Xbox One
"Some of the advantages that you get, of having, a box that is designed to use an online state, so, that, uh, to me is the future-proof choice, and I think people, could've arguably gone the other way if we didn't do it and fortunately we have a product for people who aren't able to get some form of connectivity, it's called Xbox 360," said Mattrick.
Surely, Microsoft wasn't happy that its entertainment head was telling consumers not to buy its latest product. That's why many rumors currently circulating say that Mattrick was actually fired from Microsoft, much like what happened to former Xbox Creative Director Adam Orth.
Orth was fired for arguing with gamers about their ability to play offline.
Just a week after Mattrick made these comments about the Xbox One, Microsoft
dropped its always-on requirement
and the used games restrictions for the Xbox One. This meant that gamers no longer needed to have an Internet connection to play an offline Xbox One game (they will only need to go through a one-time setup over the Internet when the console first boots up), and gamers can trade-in, lend, resell, gift, and rent disc based games just like they do now.
It's hard to say if Mattrick is leaving on his own accord or got the boot for his actions, but more details should arise later, and we'll update this piece as they do.
UPDATE: Monday, July 1, 2013 @ 5:00 P.M. -
Zynga announced in an email to all employees that Mattrick is the company's new CEO, and Zynga's current CEO (Mark Pincus) will now be the Chief Product Officer and will remain Chairman of its Board of Directors.
“This is a great opportunity for Don, and I wish him success," said Microsoft CEO Steve Ballmer. "Don’s directs will report to me and will continue to drive the day-to-day business as a team, particularly focused on shipping Xbox One this holiday. Thank you, Don, for setting us on a path to completely redefine the entertainment industry.”
Zynga's stock price jumped 10.43 percent to $3.07 this morning after rumors of the new CEO started circulating. The stock then gained another 3.58 percent reaching $3.18 per share in after-hours trading once Mattrick's new position was actually announced.
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