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