Print 9 comment(s) - last by euler007.. on Jul 29 at 9:57 AM

Zynga said it will now go "back to basics" and offer free-to-play games on mobile devices like Apple's iOS and Google's Android

Zynga can't seem to catch a break lately, and recent news of its plans to ditch real-money gaming (RMG) isn't helping.

Zynga announced that it will no longer seek to offer RMG -- which is basically gambling -- in the United States due to the fact that gambling with real money is illegal in several U.S. states. Obtaining the correct licenses would be a struggle, and Zynga prefers to focus on other areas right now.

This news didn't sit well with investors, where many only owned Zynga stock in the first place because of the potential of RMG. Macquarie (USA) Equities Research cut its target for the stock to $2.75 from $3.00, and Needham & Co analysts downgraded the stock from "buy" to "hold."

Zynga, the social gaming company responsible for the likes of "FarmVille," has been having a terrible time lately. It lost 40 percent of its monthly active users in Q2, and revenue dropped 20 percent.

Zynga has experienced financial trouble since its initial public offering (IPO). 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. 

Last month, it announced plans to lay off 18 percent of its workforce (or about 520 employees) by August 2013. It had about 2,900 employees at the time of announcement. 

The layoffs are expected to save Zynga about $70 million to $80 million. 

The problem with Zynga is that it can't keep up in the mobile space. Its Web business has been declining faster than expected, and its mobile efforts aren't enough to fill the gap. 

Another issue for Zynga is that 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).

While Zynga still has a few successful games, like FarmVille, they haven't moved to the mobile space quickly enough, and players have increasingly lost interest over the years. 

Zynga said it will now go "back to basics" and offer free-to-play games on mobile devices like Apple's iOS and Google's Android. 

Earlier this month, Don Mattrick -- the president of Microsoft’s Interactive Entertainment Business -- left Microsoft to become Zynga's new CEO. His new position will clearly be a challenge, but it looks like he's already helping to make some big decisions. 

Source: USA Today

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

By Nortel on 7/26/2013 4:37:20 PM , Rating: 3
A publicly traded company which essentially produces flash games with graphics from 10 years ago. newgrounds and kongregate have games of better caliber then the garbage Zynga pushes out the door.

RE: unbelievable
By spread on 7/26/2013 9:41:00 PM , Rating: 3
Don Mattrick is breaking new ground. While competitors are trying to become profitable and increase earnings, Zynga will instead do the opposite and take a new direction. Will this aggressive new strategy pay off?

Time will tell.

RE: unbelievable
By adrift02 on 7/27/2013 11:38:35 AM , Rating: 2
I think this a definitely a smart move. Making good games is the only long-term strategy they have and this shows he recognizes this fact. It's not like the free-to-play model is dead. As for quality, like any publisher they can pay for the talent.

RE: unbelievable
By Jedi2155 on 7/26/2013 11:36:25 PM , Rating: 2
But they make money.

RE: unbelievable
By euler007 on 7/29/2013 9:57:46 AM , Rating: 2
EPS -0.15

In a way you are right, they do make money. It's just that they spend more than they make.

RE: unbelievable
By StevoLincolnite on 7/27/2013 12:59:21 AM , Rating: 2
Don't forget that the games Zynga creates are the farthest from being "original" as you can get.

Personally I think they deserve to go bankrupt and if "going back to basics" means "Steal more game ideas" then UGH.

RE: unbelievable
By Totally on 7/27/2013 2:49:09 PM , Rating: 3
I'm surprised that the ripped EA, and there hasn't been a re-enactment of D-day with lawyers.

RE: unbelievable
By StevoLincolnite on 7/28/2013 9:31:25 AM , Rating: 2
EA did take legal action, but they settled it out of court.

"Death Is Very Likely The Single Best Invention Of Life" -- Steve Jobs

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki