Zynga Gets Zinged!
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Investors, analysts and the online gaming industry reacted with shock and surprise last week as game maker Zynga Inc. saw its share prices plummet to nearly all-time lows after the company downgraded its forecast for expected profits in the third quarter of 2012. Prices dropped 19% on Thursday to $2.27 per share after Zynga announced an expected net loss in Q3 of somewhere between $90 million to $105 million and an impairment charge of $85 million to $95 million related to it’s recent acquisition of casual gaming company OMGPOP.
The company blames it’s disappointing performance on changes in the way Facebook promotes it’s games and the poor showing of it’s mobile game Draw Something.
Zynga has been trying to move away from it’s dependence of Facebook as a platform for it’s games and has made efforts to draw players to it’s own site Zynga.com and to increase it’s presence on mobile devices. So far the strategy has proven less than successful. The company is also betting on it’s recent foray into online gambling.
For gaming affiliates problems with an industry leader like Zynga are indicative of changes across the whole spectrum of social gaming and a loss of enthusiasm for the types of free-to-play games Zynga rose to success with. It could be that the bubble has burst, and marketing efforts will have to adapt.