Zynga at a Crossroads in Mobile Quest
Posted by Rant4u
Zynga has been on a monumental losing streak. Hits have been rare, profits nonexistent and crucial employees are fleeing.
The story of the company, which developed the notion of social gaming and persuaded tens of millions of people to try it out on Facebook, illustrates how suddenly the fortunes of hot Internet companies can shift. Two years ago, as Zynga was first being talked about for a public offering, it was said to be worth $20 billion.
By the time the offering took place, a little over a year ago, it was for about $7 billion. And Zynga has spent most of the time since then sliding downhill. The value of the company Tuesday, as it released mediocre but nevertheless better-than-expected fourth-quarter results, was about $2 billion.
In the next few months, Zynga faces a critical test that will determine if even that sum is excessive: can it successfully put its most popular Web games, starting with Farmville, on mobile devices?
“Do I wish that we would have gone all-in on mobile and made a bigger commitment to it earlier?” Mark Pincus, Zynga’s founder and chief executive, said in an interview after the earnings release. “Yes.”
Mr. Pincus called 2013 “a year of investment and transition.”
“While we are excited about the long-term growth opportunity on mobile, and the opportunity to make games even more accessible to people in more parts of their day, we need to build a compelling network around it,” he said.
That is because social gaming on mobile is not necessarily social.
“It’s kind of ironic, isn’t it?” Mr. Pincus said. “You’re holding a phone, an inherently social device. Yet the experience we have is a more fragmented one.”
The pain accompanying Zynga’s transition to mobile was evident in the earnings report. Revenue was $311 million, flat with the year before. Daily users of the games were down 6 percent from the third quarter, a clear measure of flagging interest. More casual users dropped as well. Read More
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