Zynga CEO resigns – again – after terrible results

The CEO of mobile games company Zynga, Mark Pincus, has resigned – a second time – following bad results.

The decision to replace Pincus with a veteran games industry exec is Groundhog Day for the troubled company after it did exactly the same thing in 2013.

Back then, Pincus was replaced with former Electronic Arts exec Don Mattrick. This time around it is former Electronic Arts executive Frank Gibeau. Pincus will become executive chairman.

In an email sent to all staff, Pincus said he has recruited Gibeau to join Zynga's Board and noted that he is known "for driving operational excellence." Pincus acknowledged delays to a number of the company's games but argued "we are now poised to launch 10 new titles this year."

Pincus noted that Gibeau will be in charge of "strategy and execution" while he would henceforth "focus on driving our vision [for] new social experiences for our players."

Why is Pincus still there at all? It probably has something to do with the fact that he retains a majority controlling stake in the company.

Why the fall?

Both Pincus and Gibeau in a separate email put the blame for Zynga's failure to continue its early successes with games such as Farmville on a reduction in the social aspect of mobile games.

In the fourth quarter, Zynga saw a 24 per cent decline in its users, and revenue also fell from $193m the previous year to $186m.

"Games are actually less social today than when they lived on Facebook web," argued Pincus. Gibeau noted that "people are spending more and more time playing games on mobile, but there's far too much friction to find friends to play with."

Critics suggest, however, that the real problem is that Zynga went from a company that was creating new and original games to one that used its resources to copy other new, popular games while failing to bring across the aspects that made them popular.

Game spam

The company's breakout Farmville hit was largely the result of using Facebook's notification system to constantly prod people into playing it. But after a slew of other games started doing the same, Facebook clamped down on the practice.

Currently the big growth market in games is standalone apps for mobile devices, and Zynga has been slow to get into the market with big, and updated, games.

The mobile game app market has also been marked by lots of one-off successes that companies find difficult to repeat. Angry Birds' Rovio has struggled to go beyond its flagship game, and Candy Crush's King managed to go public on its success, but only just, and was swiftly acquired.

The market isn't certain that Gibeau – who, like the previous new CEO, comes from the console world – is the right answer to bring Zynga back to its successful ways. It is sure that Pincus leaving the CEO job is good news, though.

Shares have fallen 20 per cent since Pincus was brought back in April 2015, but that's nothing compared to the nearly 80 per cent fall in the company's share price since it went public in 2011. Since the news was announced, Zynga shares have gone up eight per cent. ®