The Complete Timeline Of Zynga's Disastrous 2012

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Only nine months ago, Zynga was worth $11.5 billion, pumping out new games every month at breakneck speed.

It seems so far away in time, given everything that’s happened since.

Zynga’s stock is stuck in the doldrums and it’s shuttering 11 older games like PetVille and Indiana Jones Adventure World that failed to keep large audiences. It’s just more bad news in a year full of bad news for Zynga.

2011 was a very good year. Zynga had just gone public. The paint had barely dried on its gleaming, brick-clad Dog House headquarters on the western edge of San Francisco’s South of Market district—one of the hottest destinations for talent from within and without the video-game industry.

Since then, investors wiped $10 billion off Zynga’s market cap. Executives and creative talent fled, as did players. New games were slow to come out. Acquisitions like OMGPOP soured. Zynga closed some of its offices and laid off employees. And Facebook and Zynga ripped up their special relationship, leaving Zynga as just one of many games makers on the social network’s platform.

There were some bright spots. Zynga made progress on getting into real-money gaming—that is, gambling. It swiftly filled holes in its executive lineup with new leaders. It showed signs of a creative renaissance with new games. And it remains far and away the largest player in social games.

But it’s left with a sense of wasted time and lost promise, with Wall Street setting a clock on CEO Mark Pincus’s time at the top of the company.

January started off with a whiff of optimism about real-money gaming

rumours spread that Zynga would get into online gambling, a billion-dollar revenue opportunity, though sources within the company batted those down.

It launched Hidden Chronicles, a new, more sophisticated social game, and Scramble With Friends

Hidden Chronicles ended up disappointing. It peaked at 33 million monthly active users and has since dropped to 5 million. Scramble With Friends, an extension of the Words With Friends franchise, has struggled, too, barely staying in the top 50 on Apple's ranking of mobile games.

And Zynga seemed to have the talent momentum, too

Zynga hired away Barry Cottle, a top online-games executive, from Electronic Arts. This hire stuck: After some shakeups, Cottle is now chief revenue officer.

In February, Facebook filed to go public, and revealed its dependence on Zynga

Zynga, which heavily relied on Facebook for users, bought ads on Facebook and shared revenue from in-game purchases, accounting for 12 per cent of Facebook's revenues. That codependent relationship was never comfortable for either company, however.

An anonymous Zynga employee claimed that Zynga had privileged access to Facebook's news feed. Neither company commented on that report.

The stock took a hit as Zynga revealed flattening growth in an earnings report

Marketing costs kept going higher. Zynga had taken advantage of cheap Facebook ads early on, but as more advertisers followed its lead, ad prices jumped.

In March, Zynga launched, a step towards independence from Facebook

Investors loved it.

With its stock near an all-time peak, Zynga snapped up Draw Something maker OMGPOP

For $180 million, Zynga got the hottest mobile app around--for the moment. But the mobile phenomenon's momentum seemed to stall as soon as the deal went through.

Meanwhile, Mark Pincus and other executives and investors were cashing out in a secondary offering

The offering, at $12, flooded the market with new shares--right as things were starting to come apart at the seams inside Zynga, it turns out.

For example, a talent exodus began

VP of engineering Neil Roseman left in March. And before that, Business Insider found that many members of Zynga's founding team had left to join startups or competitors.

Prophetic words. The stock slid nearly $5 in April, from $13.15 to $8.34.

Zynga needed a hit—but the pipeline was filled with halfhearted games that employees weren't excited about

Zynga's daily active users peaked in April. Behind the scenes, Facebook was making changes to its algorithms that worked against the viral mechanisms Zynga depended on to spread its games. This was not lost on insiders: Three members of Zynga's PR team left.

Then came Facebook's IPO disaster, which dragged down social stocks, including Zynga ...

Things got so bad that trading in Zynga shares was temporarily halted.

Zynga shares dropped 13 per cent on May 18, the day Facebook shares started trading.

In June, Zynga tried to turn things around with a big announcement about new games

Many of the new titles announced, like The Ville, turned out to be flops. People were cautiously optimistic about the prospect of a FarmVille sequel--but that turned out to be months away, and wouldn't help Zynga in the third quarter.

In July, Business Insider reported that Amazon was getting into Zynga's business

Jeff Bezos, once a mentor to Mark Pincus, would now compete with him.

Zynga reported its second-quarter earnings in July

They showed a disastrous drop in Facebook game play, exposing Zynga's overdependence on the social network.

COO John Schappert was stripped of most of his duties in a reorganization, and left in August

He was a high-profile hire from Electronic Arts, but got the blame for doubling down on social desktop games at a time when players were switching to mobile.

Facebook twisted the knife

At a game-developers conference, Facebook announced that game-play was up on the social network--it was just Zynga that was seeing a drop in activity on its Facebook games.

The stock dropped below $3, and employees fled

CityVille general manager Alan Patmore left for Kixeye, a rival known for trash-talking Zynga games. He later ended up embroiled in a lawsuit with Zynga over files he copied as he left the company.

Finally, Farmville 2 launched in September ...

But Zynga rolls games out slowly, and didn't begin a marketing push until late in the month. So the debut of the hotly anticipated sequel to Zynga's company-making megahit came too late to save the third quarter.

In October, Zynga cut its forecast for the third quarter

The company had overpaid for Draw Something maker OMGPOP, The Ville was a dud, and Zynga had failed to launch new games fast enough, the company said. Its shares crashed. Analysts said CEO Mark Pincus had 9 to 12 months left to turn things around. Layoff rumours ripped through Zynga's offices.

Then there were glimmers of hope ...

FarmVille 2 turned out to be a huge hit on the scale of Zynga's previous successes, attracting 50 million players.

But they came too late to stop the inevitable layoffs

Layoffs hit in Boston, Austin, London, Tokyo, and other offices.

In late October, Zynga reported a loss in its third quarter

Bad earnings--but a $200 million buyback temporarily cheered investors.

Then the finance team started quitting ...

Zynga's CFO left for Facebook and its treasurer left for Twitter. The Wall Street Journal reported that at one point, Pincus nearly broke down in tears over his company's plight.

Zynga and Facebook drastically altered the terms of their partnerships ...

Zynga used to get special treatment from Facebook. Now it was on the same level with other developers. In exchange, it got more freedom to build games outside of Facebook.

What an awful year—but there are reasons to hope that 2013 will be better for Zynga

  • Zynga struck a partnership to offer real-money gambling in the UK, and applied for a licence in Las Vegas to do the same in the US, if online gambling is legalized.
  • Game developers dominate mobile-app revenue--and Zynga has a ton of top-selling titles.
  • Zynga still has a ton of talent, like mobile leader Sean Kelly and Maytal Ginzburg Olsha, who's leading the push into online gambling.
  • And Zynga's game designers are getting creative, with The Friend Game and Zynga Elite Slots. There's no reason to believe those games will be hits, but they're edgy and different enough to show that Zynga is taking risks. Playing it safe with uninspiring Facebook games like The Ville is what got Zynga into this mess, after all.

Now see what happened to other tech companies in 2012 ...

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