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What Zynga Has To Lose By Folding its Online Gambling Hand
What Zynga Has To Lose By Folding its Online Gambling Hand

By Jennifer LeClaire
July 26, 2013 1:32PM

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Just because Zynga is one of the larger companies in the casual gaming space doesn't necessarily mean it is better positioned for success in mobile or other areas. And now that the company has folded its position on U.S. online gaming it could make it more difficult to find an edge amid nimbler players, said independent video game analyst Billy Pidgeon.
 



Zynga made big headlines recently when it named Don Mattrick as its CEO. Mattrick was positioned as a savior for the ailing casual games brand. But with Zynga scrapping its plans to enter the online gambling business in the U.S., its fortunes may be turning downward again.

Although Mattrick didn't have time to make much of an impact on the company, Zynga nevertheless beat Wall Street estimates even if it did post a loss. Zynga's second quarter revenue was $231 million, down 31 percent year-over-year. The company's bookings were $188 million. That's down 38 percent year-over-year.

Mattrick, who came to Zynga from Microsoft and officially took the reigns on July 8, put his spin on the earnings. He said the next few years will be a time of phenomenal growth in Zynga's space and the company has incredible assets to take advantage of the market opportunity.

"To do that, we need to get back to basics and take a longer term view on our products and business, develop more efficient processes and tighten up execution all across the company," he said. "We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters. I'm privileged to lead Zynga and I look forward to spending more time with our players, employees and shareholders."

A Volatile Market

Still, Billy Pidgeon, an independent video game analyst, is not bullish on the company. He told us just because Zynga is one of the larger companies in the casual gaming space doesn't necessarily mean it is better positioned for success in mobile or other areas. And now that the company has folded its position on U.S. online gaming it could make it more difficult to find an edge amid nimbler players.

"It's kind of a crapshoot. It's like the lottery. If you ask anyone in mobile who's been successful and they will tell you there's a great deal of luck involved," Pidgeon said. "There's definitely a glut of games and you can pay your way to get onto top 10 lists, but once you get there there's no guarantee that you are going to get people to fork over cash. It's a volatile market."

Zynga's Wins

Zynga released six new titles during the second quarter of 2013, including Hidden Shadows on web-based platforms, and War of the Fallen, Draw Something 2, Battlestone, Solstice Arena and Running With Friends on mobile platforms. As of June 30, 2013, Zynga had three of the top 10 games on Facebook, based on DAUs as reported by the Facebook API, including titles from its most established franchises, Words With Friends, Zynga Poker and FarmVille 2.

For the second quarter of 2013, Zynga.com, Zynga's own gaming destination, had 4.2 million monthly average users. This was the first full quarter subsequent to its relaunch to include standalone player logins for users seeking a more dedicated gaming experience.

FarmVille and FarmVille 2 combined bookings grew 29% year-over-year, continuing to demonstrate the power of Zynga's franchises. FarmVille 2 showed the value of bold beats such as County Fair, which drove a 15 percent increase in engagement of players level 20 and up.

For the first time ever, two Zynga developed games -- Running With Friends and Solstice Arena -- received Apple's "Editor's Choice" honors, demonstrating Zynga's commitment to developing quality mobile social games.
 

Tell Us What You Think
Comment:

Name:

RMG Games:

Posted: 2013-07-27 @ 4:54pm PT
Abandoning RMG in the US an obvious huge mistake that makes no sense now, clearly virtual suicide, and sad for the shareholders. Anyone even buying the "explanation"?



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