Trouble In Paradise
Zynga has had a falling out with Facebook after share prices tanked last night. Once bosom pals, the social gaming giant blames the social network for making changes that benefit new games rather than established companies, and believe that their future lies with mobile platforms.
"Facebook made a number of changes in the quarter," chief operating officer John Schappert said during an investors call. "These changes favoured new games. Our users did not remain as engaged and did not come back as often."
Zynga's share prices dropped by 40% last night in reaction to their latest quarterly earnings report. Zynga suffered a $14.7 million net loss over Q3, massively knocking consumer confidence in the company. Despite a rise in revenue, the expensive OMGPOP acquisition as well as the changing social gaming landscape hurt them badly. "Right now, everything is going wrong for Zynga," BTIG analyst Richard Greenfield commented. "In a rapidly changing internet landscape that is moving to mobile, it's very hard to have confidence these issues are temporary."
"Getting beyond the Facebook web footprint through mobile is going to give us more growth opportunities for games," Schappert concluded, suggesting that moving to new platforms will be the key to their continued survival. [New York Times]
Zynga's massive success with Farmville, Mafia Wars and other properties have been tempered by allegations of plagiarism, and this is another blow for the company. Are Zynga prepared to stand on their own without Facebook's ready-built player base and infrastructure?