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No End in Sight for Zynga’s Problems

No End in Sight for Zynga’s Problems


No End in Sight for Zynga’s Problems

No End in Sight for Zynga’s ProblemsNEW YORK – Social gaming developer, Zynga (NASDAQ:ZNGA) has been a loser since its IPO in December 2011.  Publicized acquisitions have failed to deliver, existing games are losing popularity, and strategic initiatives, such as online gaming, have proven a waste of effort.  Furthermore, the overall industry is witnessing slowing growth and analysts are concerned that if something does not change the company will be heading for oblivion.

While the company expects revenues of $ 175 to $ 200 million, for the current ending this month; it will not be able to make a profit as analysts expect a loss of $ 14 million to $ 43 million.

Furthermore, the competition has become even more agile. Facebook (NASDAQ:FB) announced plans to launch a new publishing platform for third party mobile game developers offer advertising and analytical support in exchange for more stringent publishing guidelines.  Industry analysts believe this will help smaller game developers to access Facebook’s billion plus users, further impacting Zynga’s share on the social network.

Nevertheless, it is not just the small developers, has achieved success with Candy Crush Saga, the game generates more than $ 600,000 per day in revenue, and the London-based company recently announced plans to IPO on the NASDAQ.  A big part of King’s success has been the focus on skill-based games and their growing reputation for quality releases.  Startup, Supercell managed to eclipse Zynga’s revenue by posting $ 179 million on the back of two successful iOS games – Hay Day and Clash of Clans.

Zynga’s new leadership has talked about getting back to basics, the company is running out of time, and they need another massive hit soon, or they will be in serious trouble.  However, a massive hit will only help the company get out of the hole they are in now.  Without a strategy to attract and retain users, the company’s turnaround will always be unfinished.  Whilst there is value in the company, today, that value will expire if management cannot turn the company around soon.

About Stephany Wilson

Stephany Wilson covers business and finance related news.

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