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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

July 1, 2013 at 11:04 AM

Confirmed: Xbox President Mattrick to head Zynga

Zynga confirmed today that it has hired Don Mattrick, head of Microsoft’s entertainment group, as its new chief executive.

It’s a striking move coming as Microsoft prepares to launch the next generation of its Xbox console this holiday season. But Mattrick may have been losing turf in a major reorganization believed to be underway at Microsoft. For the time being, Chief Executive Steve Ballmer will directly oversee the Xbox business.

Word of Mattrick’s depature from Microsoft surfaced earlier on the AllThingsD blog.

Don Mattrick unveiling the Xbox One on May 21 at Microsoft’s Redmond campus. (AP Photo/Ted S. Warren)

I’d wondered if Mattrick would leave to head Electronic Arts, which is looking for a chief executive and was where Mattrick spent much of his career.

A move to struggling social-games maker Zynga seems like a lateral move in terms of the size of the business Mattrick will oversee, though now he’ll be chief executive of an independent game company as opposed to one of numerous senior executives at an evolving software conglomerate.

Zynga founder Mark Pincus confirmed the hiring in a blog post. Pincus will remain as chief product officer and chairman.

“As I reflect on the past six years, I realize that I’ve had the greatest impact working as an entrepreneur with product teams, developing games that could entertain and connect millions,” Pincus wrote. “I’ve always said to Bing (board member Bing Gordon) and 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 that Don is that leader.”

Mattrick said in a release that Zynga is has “yet to realize it’s full potential.”

“In its short history, Zynga has redefined entertainment and brought social gaming to the mainstream. More than 1 billion people across web and mobile have installed Zynga games, and franchises like FarmVille and Words With Friends have become a part of people’s daily lives,” he said. “I joined Zynga because I believe that Mark’s pioneering vision and mission to connect the world through games is just getting started. Zynga is a great business that has yet to realize its full potential. I’m proud to partner with Mark to deliver high-quality, fun, social games wherever people want to play.”

Ballmer wished Mattrick success in an email to employees confirming the move. Mattrick’s lieutenants will now report directly to Ballmer, he said, without any mention of hiring a replacement.

“Thank you, Don, for setting us on a path to completely redefine the entertainment industry,” Ballmer’s note said. “The strong leadership team at IEB and their teams are well positioned to deliver the next-generation entertainment console, as well as transformative entertainment experiences, long into the future.”

(Ballmer’s memo is pasted below.)

In its last fiscal year, Microsoft’s entertainment group had sales of $9.6 billion while Zynga had sales of $1.3 billion.

The move follows reports last month that Microsoft was nearing a big reorganization so Mattrick’s situation in Redmond was probably in flux. Perhaps the reorg is driving him out, especially if he’s losing control of a big portion of his group in Redmond.

A Bloomberg report last month suggested that Mattrick was potentially going to lead hardware development, one of four new major business groups that could be created by the reorganization. Hardware has traditionally been part of the entertainment group but other divisions at Microsoft are now producing their own hardware products, such as Surface PCs made by the Windows group.

A reorganization that clarifies financial reporting of Microsoft’s consumer businesses is overdue. In its quarterly reports, Microsoft now lumps Xbox sales together with sales of Windows Phone and Skype, even though the phone and Skype businesses are managed separately by senior executives other than Mattrick. Changes here seem inevitable and Mattrick may be the first victim of the palace intrigue.

AllThingsD had cited three sources saying that Mattrick was close to taking a top job at Zynga, helping the San Francisc0-based company regain its footing. Zynga’s stock rose 10.4 percent on the news, closing at $3.07 before Mattrick’s hiring was confirmed after the close of regular trading.

Microsoft provided Ballmer’s statement but a spokesman declined to discuss any future organizational changes.

Mattrick, a 49-year-old Vancouver, B.C., native, came to Microsoft in 2007 from EA where he was most recently president of its worldwide studios.

Zynga’s release included comments from board member and investor John Doerr, saying that Pincus “took the lead” in recruiting Mattrick. It also noted that Mattrick will report directly to the company’s board of directors.

Here’s a photo of Mattrick and Pincus released by Zynga:

Mark Pincus and Don Mattrick

Here is Ballmer’s note to employees on “Don Mattrick’s Next Chapter”:

Zynga announced today that Don Mattrick would be its new CEO, effective July 8. This is a great opportunity for Don, and I wish him success. 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.

Since joining IEB 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 two 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.

In the past month, the IEB team showed for the first time here on our Redmond campus, and again at E3, how we are going to continue to transform entertainment with Xbox One. I am incredibly proud of the work and vision culminating in Xbox One.

I’m particularly excited about how Xbox pushes forward our devices and services transformation by bringing together the best of Microsoft. The consoles are incredible all-in-one devices with built-in services that consumers love, including Bing, Xbox Live, Internet Explorer, SkyDrive and Skype. And, just as important, Xbox Games, Xbox Video, Xbox Music and SmartGlass light up Windows PCs, tablets and phones.

Thank you, Don, for setting us on a path to completely redefine the entertainment industry. The strong leadership team at IEB and their teams are well positioned to deliver the next-generation entertainment console, as well as transformative entertainment experiences, long into the future.

Steve

 

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