Has Zynga hit the buffers?
Thursday, July 26, 2012 2:49 PM
Zynga, the firm behind popular Facebook-hosted games like FarmVille, appears to be on the ropes after posting poor financial results, which saw its stock plummet by more than 40 per cent.
In its second quarter results, the company reported that it had made losses of nearly $23,000 (£14,800) but, more worryingly for investors, it also slashed its forecast for bookings - its revenue less fees it pays Facebook - for the rest of the year by some $0.3 billion.
The development prompted claims that the social gaming bubble has burst and sent Facebook stocks into an eight per cent slide of their own.
As well as taking a hit on the stock exchange, the social network was also in the firing line from the verbal bullets of Zynga's chief operating officer John Schappert, who laid some of the blame for the crisis at Facebook's door.
"Facebook made a number of changes in the quarter," Mr Schappert told investors in a results conference call.
"These changes favoured new games. Our users did not remain as engaged and did not come back as often."
These comments will likely irk Mark Zuckerberg given that Facebook was the catalyst for Zynga's rapid growth in the first place, not to mention the fact that the social network has also lost value as a result of the Mafia Wars developer's failings so far in 2012.
And Michael Gartenberg of Gartner believes the issue for Zynga is not the platform, but with the whole concept of social gaming itself.
"At the end of the day … virtual goods might not be a viable business strategy. People eventually stop spending money in virtual goods and want to spend that money on real goods," he explained.
What are your thoughts? Would you be sad to see social games disappear or is there a place for FarmVille and co?