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Zynga Has A Tough Quarter And Blames Facebook

Sean W. Jul 26, 2012 0

Zynga had a tough quarter with signs of slowing growth.  The reason for this slowing growth, according to Zynga, is because of Facebook.

Zynga’s stock soared last year when the company went public and analyst went bananas.  Since then, the stock has slowed down substantially.  It is currently now valued at about 70% of it’s original price one year ago.

The fault here, according to Zynga, is because of Facebook and how they show games in their app center.  Facebook has changed their system that shows newer games upfront.  Players are not as engaged or come back as often because of the change.  Facebook did not make a response to this claim.

The bigger problem Zynga faces is their dependence on Facebook.  The company has launched Zynga with Friends, a service that gives players access to Zynga games across multiple platforms including iOS, Android as well as Facebook.  This will allow them to start engaging gamers and keep them playing after then turn off Facebook, or so the company hopes.

Though Zynga seems to blame Facebook for their slowed growth, the element that seems to be ignored by Zynga is the increased competition.  Games are becoming bigger and better with larger stories, improved gameplay and better graphics.  More competition means Zynga’s games will need to do a bit more to stand out, even though the publisher’s name is on them. Zynga is not shy on any products as the company has announced they have a steady line of games coming out throughout the remainder of the year.  One announced product is called Horn, a higher profile game featuring 10 hours of gameplay that will have them compete directly with companies like EA and more.

What do you think, is Facebook the blame for Zynga’s struggles or is this more revealing of the true value of the companies stock in today’s market?

Via »WSJ