“Online poker is one of the many games offered by Zynga, a firm that was once the poster child of the social-gaming revolution. But anyone buying its shares today would be placing a very risky bet,” The Economist reports. “On June 3rd Mark Pincus, the firm’s boss, announced it was firing over 500 people, or roughly 18% of its workforce, in a bid to turn itself around. The company is also expected to shutter offices that it had opened in New York and Los Angeles.”
“Zynga’s fall from grace — its shares closed at $2.99 following Mr Pincus’s announcement compared with $10 at the time of its initial public offering in 2011 — is all the more striking given that more and more people like playing relatively simple games online,” The Economist reports. “According to an estimate by eMarketer, a research firm, the number of Americans playing games like Farmville and Words With Friends, two Zynga offerings, is expected to grow by more than 5% this year. ”
The Economist reports, “So why is Mr Pincus swinging the axe? The answer is that Zynga built its business model around desktop-computer gaming, which was all the rage in the years after the firm was founded in 2007… But more and more social gaming is now taking place on fast-growing mobile platforms such as smartphones and tablet computers, where Zynga is far weaker… The firm’s revenue in the first quarter of the year fell by roughly 18%, to $264 million. If Mr Pincus cannot halt the slide, it will be game over for Zynga.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “David G.” for the heads up.]