Zynga plays BLAME GAME with Facebook as stock tanks 40%
Zuck to face Wall Street with first earnings report
Online gaming outfit Zynga has partly blamed competition being opened up on Facebook's platform for the maker of Farmville having to revise down its outlook for the year.
The company, which claims some 300 million monthly users, is also struggling to quickly release new games onto the market.
We are lowering our outlook to reflect delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something.
Zynga's chief Mark Pincus said the company had "faced new short-term challenges which led to a sequential decline in bookings" during the quarter.
Net losses continued for a second quarter at the San Francisco-based gaming firm, with Zynga bleeding nearly $23m during the three months ended 30 June, compared with a $1.4m profit in the same period in 2011.
It reported total revenues of $332m with advertising sales looking particularly brisk.
Despite that, the company has been forced to press reset on its outlook for the year – a move that displeased Wall Street.
Shares in Zynga tanked by 40 per cent in after-hours trading, falling to $3.20.
Stock in Facebook – which will announce its first quarterly results today – followed suit, tumbling 6 per cent to $27.29 before the bell on Wall Street. ®
The revenue forecasts and therefore stock quotations of both Zynga and Facebook are built on the presumption that FB users are 'captive' clients and that the user base can only grow. Clearly this is not the case and users will quickly move on to the next shiny new thing, especially younger people to whom the original FB demographic (who are now 30-somethings like yours truly) are now old fuddy-duddies
It seems like sooner rather than later the penny will drop for investors.
This is the company that employs clinical psychologists to better exploit it's 'game' players?
#plays world's tiniest violin#
Re: Games on Facebook
Zynga have been messing people round on their own servers too... .changing things for no reason, basically making it so that to have any chance of progressing in a game you have to spend money with them. A lot of the gamers playing Zynga games are casual users so when they're faced with having to spend real money to progress in a game and know that they'll have to do it again in a few days they do what you'd expect and walk away.