8 ms·

Zynga loses $15.8M in Q2, nearly half its daily users year-over-year

120 points by bentcorner 13y ago

panabee 13y ago
depending on the streaming quality, chromecast could help zynga port games to the TV and create new types of gaming experiences centered around the TV (where devices are controllers, and a laptop/desktop is the brain).
- deleted 13y ago
  [deleted]
- rdl 13y ago
  They're just basically in a holding pattern until they can do "real money gaming", is what I thought. It's not clear that they have any particular advantage in real money gaming over either new entrants or existing real money gaming/gambling companies, though, especially since there seems to have been a "brain drain" over the past 2 years.
  - jelled 13y ago
    They specifically said on the earnings call that they are no longer pursuing real money gaming in the United States. Part of the reason why the stock tanked so hard in after hours.
    - rdl 13y ago
      Fuck. I had options :( (part of my "buy long positions in evil companies, especially after bad news; people underestimate the profit potential of evil and overestimate meaningful public or government reaction" -- generally works well though.)
      - steven777400 13y ago
        I've considered this strategy, but it seems to not be as reliable as one might expect. The obvious example is the BP oil spill. The stock lost half it's value, from about $60 a share to about $30 a share, in two weeks. However, if you didn't time the buy-in just right, you would have bought at around $35 - $40 a share (if you bought either early or late), and today it trades at $43. That's the difficulty with many analysis ideas - they work great in retrospect only, when you can see exactly when the low points are, and can believe "If I had bought on that day, I would have made a mint." But from day-to-day, determining "that day" is virtually impossible.
        rdl 13y ago
        Yeah, I got into BP at 28x100, 30x200, 32x400 and got out at 45 (half each time it hit that) -- this was before I started playing with options instead. I intended to buy more on the way down. I was also planning to hold it indefinitely but needed the cash to buy other stuff (it's all in a Roth, so it's hard for me to put cash in.) In general, though, it's not about "buying on news", it's "buying sinful industries in general, but particularly on bad news/dips" -- defense, oil/coal, alcohol, etc. The other model I've used which has been far more effectively (and less disgusting morally) is "buy products I know a lot about and really like, as long as the company itself doesn't have serious financial or leadership problems"; TSLA, MSA (they make the world's best body armor, which I loved in Iraq, Paraclete), various arms manufacturers, etc.
        jlgaddis 13y ago
        > "buying sinful industries in general, but particularly on bad news/dips" Interesting model; haven't ever thought about it like that.
    - dakrisht 13y ago
      Exactly. They "gave up" on real money gaming. Not happening and won't save them.
- pietro 13y ago
  Chromecast doesn't stream from the device to the TV. It just receives a request from the device, then pulls the stream directly from the web. As far as I understand it, it's useless for games. Streaming with AirPlay, on the other hand, is a totally different story, especially with controller support in iOS7. It fully supports the scenarios you're talking about.
  - rdl 13y ago
    It can also stream a Chrome tab in a browser.
    - panabee 13y ago
      precisely. chromecast is essentially a xbox killer and a platform for marrying the computing power of a desktop, the development model of the web, and the leanback experience of the TV (assuming the streaming works well).
dakrisht 13y ago
Still can't figure out, month after month, how this lousy company is still in business. Some truly mind-blowing stuff here. Zynga folding is now expected. Mattrick will be gone in < 90 days and then the ship will finish it's descent into deep waters. Unfortunate for the employees who have been (and are being) laid off. But this company has always been a model for failure. Ripping off and blatantly copying games to monetize briefly using FB's platform and then leveraging the temporary growth into huge VC investments to quickly cash out and disappear is the epitome of scum leadership and vision. This company has always been and always will be a pure scam. Period.
- mhartl 13y ago
  *its descent
- robryan 13y ago
  I guess they are still sitting on cash reserves. There is a profitable business in Zynga, as much as some people hate that. They need to downsize and make more targeted bets.
  - dakrisht 13y ago
    Cash runs out, especially with their overhead. Sure, the downsizing helped, but there's no reason they need that kind of staffing. VC's will push for huge hires in the beginning. But the company has been taking for well over a year. The IPO was a scam, Pincus raped the price and stole $200M. The SEC should investigate him 100% They need a good product. They don't have one. They probably won't have one since their entire company revolves around copying former titles (like the Sim games). I wonder what happened with the EA assault on Zynga?
    - newnewnew 13y ago
      The shitty thing is that all of Pincus's sins will be forgotten the next time he starts a company because in Silicon Valley a man's worth is measured by his bank account.
wilfra 13y ago
I've been betting heavily on a turnaround, adding to my position in ZNGA each time it dipped below $3. Real money gambling I knew would be the savior and since they weren't burning much cash any more, they just had to wait for that to pass in the US. Them canceling those plans - and Mattrick saying they are 'resetting' and expect volatility to continue, makes me lose my faith. I think I'm going to get out of the stock. I don't know much about Mattrick so maybe he is a turnaround specialist and what he did at EA and Microsoft was great and he will save the company - but the business they are in is a loser. And they don't appear to be interested in a pivot. Sad day. I now agree with the sentiment that Zynga is a dead company.
- kevingadd 13y ago
  Mattrick's track record with XBox One really should not inspire any confidence. But maybe that was just an unfortunate set of circumstances outside his control...
  - lotso 13y ago
    Mattrick's track record of the last 4 months vs. his 31 years of success in the game industry.
- mmmooo 13y ago
  The current user trend is still nothing but down. With user acquisition costs likely not getting any smaller, they aren't that far away from crossing the threshold of not having enough users to migrate to a new game, to spark it. At that point, it won't matter if their games are original, or re-badged copies of other games. They'll be in the same situation as your average (or below average) game dev startup, except with 10x (or 100x if they don't do more layoffs) the expenses.
- dakrisht 13y ago
  Sorry for your loss. At least you understand the dynamics of the company you've invested in and took some (big) bets. Loses happen, companies tank. I would probably hold the stock. Someone might buy them out for their talent, or whatever is left of it. I'm sure you're deep in the red, might not be the best idea to cash out.
ChrisNorstrom 13y ago
Ah yes, the "Shit got old" symptom. Every startup needs to watch out for this one. Users are aquired in several different ways, 2 main ones are: - Tricking users into your product or service through gimmicks, lies, or aggressive marketing. - Earning users by solving their problem and selling them value. Zynga did the former and users are getting sick of it. Other examples are infomercial products, they sell like crazy based on promises and gimmicks and fade away into oblivion in the mid and long term. Think back to all the things you've seen on TV (especially exercise products and makeup brands), how many of them are still around? Despite many of them being successful and collecting dust in millions of homes' basements, they fizzed out.
- dakrisht 13y ago
  http://www.escapistmagazine.com/news/view/96024-Zynga-CEO-Admits-to-Being-a-Scammer http://www.escapistmagazine.com/news/view/96024-Zynga-CEO-Ad...
jsmcgd 13y ago
I find it weird how this story/event/business is positioned. Basically Zynga is a collection of mostly similar games. All popular games follow the same life cycle. If a game is good, people play the game. The game becomes popular. Then people get bored of the game, and they stop playing. I feel sorry for people, especially those at Zynga, who didn't see this.
AndyKelley 13y ago
Good riddance.
- dakrisht 13y ago
  And in 24 hours, Candy Crush will announce a $100M raise at an $880M valuation :) The model is fucked. But I agree with you.
  - dj_axl 13y ago
    They've already raised $44 million, and probably have a near $1 billion valuation. http://tech.fortune.cnn.com/2013/01/17/how-king-com-crushed-zynga/ http://tech.fortune.cnn.com/2013/01/17/how-king-com-crushed-...
jejacks0n 13y ago
I don't like the model of paying for a digital object that doesn't do anything besides bypass a bit of code that makes the experience more laborious or time delayed. I personally download these games and play the shit out of them, but never ever give them money. It becomes a different aspect of the game -- sure, I have plenty of money to give you, but I don't think I should give it for something to speed up the experience -- I mean, you designed the experience, so it becomes a personal challenge until the game becomes boring -- oh, and I never mention it to anyone else, as to remove the word of mouth part. I happily pay for good games that don't use this mechanic and tell my friends about how rad they are. It's how I speak with my wallet.
moutarde 13y ago
I think that Zynga's major problem is a about changing markets: Zynga grew rich making clones of other games and cleverly using web-based-social-promotion via Facebook to advertise them cheaply. But now they face the same problem that Facebook itself faces - that more users are now mobile based than web-based - combined with the fact that much bigger companies are now not only licencing/cloning games but also combining them with their existing IP which has a much bigger draw for users because of the combined marketing clout behind it. For example: * Disney/Pixar now have two top free to play apps based on combining Temple Run with their existing IP. These games not only follow a proven winning formula, but they also piggy back on the movies marketing budgets to promote the games (to a much larger extent that Zynga could afford) * Universal Pictures has cloned Temple Run Zynga style (but with much more original flair) to make their Despicable Me app game. Like Disney their massive film marketing budget drives the games success, and rather than users having to "warm up" to new characters, the lovable minions are already there for instant recognition/gratification. * Rovio has made great strides making their original IP (Angry Birds) worthy of Disney level acclaim, but they've also heavily co-branded (via advertising and Angry Birds Star Wars) in order to increase profits.
- babuskov 13y ago
  AFAIK, Universal Pictures cloned Subway Surfers.
- CmonDev 13y ago
  Jetpack Joyride is another clone of Temple Run. And Halfbrick are not that big and rich.
  - deleted 13y ago
    [deleted]
  - russellsprouts 13y ago
    If that's true, then Jetpack Joyride and Temple Run are both clones of the helicopter game, and every 2d platformer is the same.
27182818284 13y ago
Like a lot of people, this just makes me feel vindicated. As someone who has actually bought Zynga games, I could post you the back-and-forth, back-and-forth, back-and-forth, email thread I had with their tech support over the most minor issue, but it wouldn't help anything. (Essentially there was a minor bug in a game between me and this other player but their only "solution" was to block the user for 3 days and then restart.)
jfb 13y ago
I wonder about the long term viability of these sorts of pay to win games; they seem awfully vulnerable to the whims of the platform owners, and they're easy to paint as more like tobacco than they are to toys or video games. Personally, I'd like to see them all crushed, their offices burnt to the grown and sown with salt -- Zynga delinda est and all that.
Vivtek 13y ago
It's almost as though form-over-content and superstimuli combined with an easy-cash mentality aren't compatible with long-term profitability! What is this world coming to!
alexnewman 13y ago
And the afterhours trading is crazy
koft 13y ago
Worst companies for employees
chinmoy 13y ago
Marco Arment twitted this today and I wholeheartedly agree, "It’s hard to celebrate a big company’s misfortune since it involves so many people’s jobs, but fuck Zynga and good riddance to their profit."
likeclockwork 13y ago
All those promising companies they bought have been swallowed by the beast and now die in its belly. Like Dextrose with their Aves engine.. that looked truly impressive then they sell out to Zynga and who knows what crapware their innovation is now powering. Hopefully some of that sees the light of day again.
hillary55 13y ago
Mark Pincus has a Stasi-like scheme which is how Zynga uncovers game ideas and other business secrets. It involves using the accounts of people under his influence, use of false identities and phishing. Offering a job in some company is another way he uses to have victims volunteer information or answer questions. Not even these tricks has saved Zynga after they lost the guaranteed traffic deal with Facebook. Mark Pincus is unlikely to get caught, but as the CEO of a publicly traded company, supported by Kleiner and others, he was a criminal, like Richard Nixon but on a smaller scale.

120 points by bentcorner 13y ago

depending on the streaming quality, chromecast could help zynga port games to the TV and create new types of gaming experiences centered around the TV (where devices are controllers, and a laptop/desktop is the brain).

deleted 13y ago
[deleted]
rdl 13y ago
They're just basically in a holding pattern until they can do "real money gaming", is what I thought. It's not clear that they have any particular advantage in real money gaming over either new entrants or existing real money gaming/gambling companies, though, especially since there seems to have been a "brain drain" over the past 2 years.
- jelled 13y ago
  They specifically said on the earnings call that they are no longer pursuing real money gaming in the United States. Part of the reason why the stock tanked so hard in after hours.
  - rdl 13y ago
    Fuck. I had options :( (part of my "buy long positions in evil companies, especially after bad news; people underestimate the profit potential of evil and overestimate meaningful public or government reaction" -- generally works well though.)
    - steven777400 13y ago
      I've considered this strategy, but it seems to not be as reliable as one might expect. The obvious example is the BP oil spill. The stock lost half it's value, from about $60 a share to about $30 a share, in two weeks. However, if you didn't time the buy-in just right, you would have bought at around $35 - $40 a share (if you bought either early or late), and today it trades at $43. That's the difficulty with many analysis ideas - they work great in retrospect only, when you can see exactly when the low points are, and can believe "If I had bought on that day, I would have made a mint." But from day-to-day, determining "that day" is virtually impossible.
      - rdl 13y ago
        Yeah, I got into BP at 28x100, 30x200, 32x400 and got out at 45 (half each time it hit that) -- this was before I started playing with options instead. I intended to buy more on the way down. I was also planning to hold it indefinitely but needed the cash to buy other stuff (it's all in a Roth, so it's hard for me to put cash in.) In general, though, it's not about "buying on news", it's "buying sinful industries in general, but particularly on bad news/dips" -- defense, oil/coal, alcohol, etc. The other model I've used which has been far more effectively (and less disgusting morally) is "buy products I know a lot about and really like, as long as the company itself doesn't have serious financial or leadership problems"; TSLA, MSA (they make the world's best body armor, which I loved in Iraq, Paraclete), various arms manufacturers, etc.
        jlgaddis 13y ago
        > "buying sinful industries in general, but particularly on bad news/dips" Interesting model; haven't ever thought about it like that.
  - dakrisht 13y ago
    Exactly. They "gave up" on real money gaming. Not happening and won't save them.
pietro 13y ago
Chromecast doesn't stream from the device to the TV. It just receives a request from the device, then pulls the stream directly from the web. As far as I understand it, it's useless for games. Streaming with AirPlay, on the other hand, is a totally different story, especially with controller support in iOS7. It fully supports the scenarios you're talking about.
- rdl 13y ago
  It can also stream a Chrome tab in a browser.
  - panabee 13y ago
    precisely. chromecast is essentially a xbox killer and a platform for marrying the computing power of a desktop, the development model of the web, and the leanback experience of the TV (assuming the streaming works well).

dakrisht 13y ago

Still can't figure out, month after month, how this lousy company is still in business. Some truly mind-blowing stuff here. Zynga folding is now expected. Mattrick will be gone in < 90 days and then the ship will finish it's descent into deep waters. Unfortunate for the employees who have been (and are being) laid off. But this company has always been a model for failure. Ripping off and blatantly copying games to monetize briefly using FB's platform and then leveraging the temporary growth into huge VC investments to quickly cash out and disappear is the epitome of scum leadership and vision. This company has always been and always will be a pure scam. Period.

mhartl 13y ago
*its descent
robryan 13y ago
I guess they are still sitting on cash reserves. There is a profitable business in Zynga, as much as some people hate that. They need to downsize and make more targeted bets.
- dakrisht 13y ago
  Cash runs out, especially with their overhead. Sure, the downsizing helped, but there's no reason they need that kind of staffing. VC's will push for huge hires in the beginning. But the company has been taking for well over a year. The IPO was a scam, Pincus raped the price and stole $200M. The SEC should investigate him 100% They need a good product. They don't have one. They probably won't have one since their entire company revolves around copying former titles (like the Sim games). I wonder what happened with the EA assault on Zynga?
  - newnewnew 13y ago
    The shitty thing is that all of Pincus's sins will be forgotten the next time he starts a company because in Silicon Valley a man's worth is measured by his bank account.

wilfra 13y ago

I've been betting heavily on a turnaround, adding to my position in ZNGA each time it dipped below $3. Real money gambling I knew would be the savior and since they weren't burning much cash any more, they just had to wait for that to pass in the US. Them canceling those plans - and Mattrick saying they are 'resetting' and expect volatility to continue, makes me lose my faith. I think I'm going to get out of the stock. I don't know much about Mattrick so maybe he is a turnaround specialist and what he did at EA and Microsoft was great and he will save the company - but the business they are in is a loser. And they don't appear to be interested in a pivot. Sad day. I now agree with the sentiment that Zynga is a dead company.

kevingadd 13y ago
Mattrick's track record with XBox One really should not inspire any confidence. But maybe that was just an unfortunate set of circumstances outside his control...
- lotso 13y ago
  Mattrick's track record of the last 4 months vs. his 31 years of success in the game industry.
mmmooo 13y ago
The current user trend is still nothing but down. With user acquisition costs likely not getting any smaller, they aren't that far away from crossing the threshold of not having enough users to migrate to a new game, to spark it. At that point, it won't matter if their games are original, or re-badged copies of other games. They'll be in the same situation as your average (or below average) game dev startup, except with 10x (or 100x if they don't do more layoffs) the expenses.
dakrisht 13y ago
Sorry for your loss. At least you understand the dynamics of the company you've invested in and took some (big) bets. Loses happen, companies tank. I would probably hold the stock. Someone might buy them out for their talent, or whatever is left of it. I'm sure you're deep in the red, might not be the best idea to cash out.

ChrisNorstrom 13y ago

Ah yes, the "Shit got old" symptom. Every startup needs to watch out for this one. Users are aquired in several different ways, 2 main ones are: - Tricking users into your product or service through gimmicks, lies, or aggressive marketing. - Earning users by solving their problem and selling them value. Zynga did the former and users are getting sick of it. Other examples are infomercial products, they sell like crazy based on promises and gimmicks and fade away into oblivion in the mid and long term. Think back to all the things you've seen on TV (especially exercise products and makeup brands), how many of them are still around? Despite many of them being successful and collecting dust in millions of homes' basements, they fizzed out.

dakrisht 13y ago
http://www.escapistmagazine.com/news/view/96024-Zynga-CEO-Admits-to-Being-a-Scammer http://www.escapistmagazine.com/news/view/96024-Zynga-CEO-Ad...

jsmcgd 13y ago

I find it weird how this story/event/business is positioned. Basically Zynga is a collection of mostly similar games. All popular games follow the same life cycle. If a game is good, people play the game. The game becomes popular. Then people get bored of the game, and they stop playing. I feel sorry for people, especially those at Zynga, who didn't see this.

AndyKelley 13y ago

Good riddance.

dakrisht 13y ago
And in 24 hours, Candy Crush will announce a $100M raise at an $880M valuation :) The model is fucked. But I agree with you.
- dj_axl 13y ago
  They've already raised $44 million, and probably have a near $1 billion valuation. http://tech.fortune.cnn.com/2013/01/17/how-king-com-crushed-zynga/ http://tech.fortune.cnn.com/2013/01/17/how-king-com-crushed-...

jejacks0n 13y ago

I don't like the model of paying for a digital object that doesn't do anything besides bypass a bit of code that makes the experience more laborious or time delayed. I personally download these games and play the shit out of them, but never ever give them money. It becomes a different aspect of the game -- sure, I have plenty of money to give you, but I don't think I should give it for something to speed up the experience -- I mean, you designed the experience, so it becomes a personal challenge until the game becomes boring -- oh, and I never mention it to anyone else, as to remove the word of mouth part. I happily pay for good games that don't use this mechanic and tell my friends about how rad they are. It's how I speak with my wallet.

moutarde 13y ago

I think that Zynga's major problem is a about changing markets: Zynga grew rich making clones of other games and cleverly using web-based-social-promotion via Facebook to advertise them cheaply. But now they face the same problem that Facebook itself faces - that more users are now mobile based than web-based - combined with the fact that much bigger companies are now not only licencing/cloning games but also combining them with their existing IP which has a much bigger draw for users because of the combined marketing clout behind it. For example: * Disney/Pixar now have two top free to play apps based on combining Temple Run with their existing IP. These games not only follow a proven winning formula, but they also piggy back on the movies marketing budgets to promote the games (to a much larger extent that Zynga could afford) * Universal Pictures has cloned Temple Run Zynga style (but with much more original flair) to make their Despicable Me app game. Like Disney their massive film marketing budget drives the games success, and rather than users having to "warm up" to new characters, the lovable minions are already there for instant recognition/gratification. * Rovio has made great strides making their original IP (Angry Birds) worthy of Disney level acclaim, but they've also heavily co-branded (via advertising and Angry Birds Star Wars) in order to increase profits.

babuskov 13y ago
AFAIK, Universal Pictures cloned Subway Surfers.
CmonDev 13y ago
Jetpack Joyride is another clone of Temple Run. And Halfbrick are not that big and rich.
- deleted 13y ago
  [deleted]
- russellsprouts 13y ago
  If that's true, then Jetpack Joyride and Temple Run are both clones of the helicopter game, and every 2d platformer is the same.

27182818284 13y ago

Like a lot of people, this just makes me feel vindicated. As someone who has actually bought Zynga games, I could post you the back-and-forth, back-and-forth, back-and-forth, email thread I had with their tech support over the most minor issue, but it wouldn't help anything. (Essentially there was a minor bug in a game between me and this other player but their only "solution" was to block the user for 3 days and then restart.)

jfb 13y ago

I wonder about the long term viability of these sorts of pay to win games; they seem awfully vulnerable to the whims of the platform owners, and they're easy to paint as more like tobacco than they are to toys or video games. Personally, I'd like to see them all crushed, their offices burnt to the grown and sown with salt -- Zynga delinda est and all that.

Vivtek 13y ago

It's almost as though form-over-content and superstimuli combined with an easy-cash mentality aren't compatible with long-term profitability! What is this world coming to!

alexnewman 13y ago

And the afterhours trading is crazy

koft 13y ago

Worst companies for employees

chinmoy 13y ago

Marco Arment twitted this today and I wholeheartedly agree, "It’s hard to celebrate a big company’s misfortune since it involves so many people’s jobs, but fuck Zynga and good riddance to their profit."

likeclockwork 13y ago

All those promising companies they bought have been swallowed by the beast and now die in its belly. Like Dextrose with their Aves engine.. that looked truly impressive then they sell out to Zynga and who knows what crapware their innovation is now powering. Hopefully some of that sees the light of day again.

hillary55 13y ago

Mark Pincus has a Stasi-like scheme which is how Zynga uncovers game ideas and other business secrets. It involves using the accounts of people under his influence, use of false identities and phishing. Offering a job in some company is another way he uses to have victims volunteer information or answer questions. Not even these tricks has saved Zynga after they lost the guaranteed traffic deal with Facebook. Mark Pincus is unlikely to get caught, but as the CEO of a publicly traded company, supported by Kleiner and others, he was a criminal, like Richard Nixon but on a smaller scale.