Zynga Falls Back to Earth

This is the most insightful article about Zynga and the state of Social Gaming I’ve read in a while. It’s a must-read - some quotes below. Read the whole article here:  http://www.gamesindustry.biz/articles/2012-06-15-zynga-falls-back-to-earth

Zynga has struggled on mobile - as, in fact, has Facebook, whose primary threat right now comes not from rivals on the web like Google+, but from the threat of a mobile-first social network emerging which takes users’ attention and engagement from Facebook. Both Facebook and Zynga have pursued similar strategies in attempting to overcome this problem - they’ve whipped out their wallets and paid huge sums of money for companies who do mobile right. Facebook dropped a cool billion dollars on mobile-based photo sharing service Instagram, while Zynga’s immense and seemingly ill-advised investment in Draw Something is likely to become the stuff of industry legend.

It’s hard to characterise Zynga’s behaviour as anything other than panic-buying. The company is terrified of mobile - a platform where it won’t enjoy the dominance it did on Facebook, where Apple (in particular) expressly forbids many of the exploitative viral techniques it used to build that dominance in the first place, and where smaller, more nimble developers seem to be building empires while Zynga tries to figure out what the hell to do next. 

Video game companies are no different to any other kind of media company - a film studio, a book publisher, a record label. You have a back catalogue that generates some revenue, but your growth has to come from new releases. You’re relying on a schedule of new releases to generate at least a few break-out hits which will drive your profits and keep your company looking healthy. A good back catalogue evens out your annual revenue figures, but if you don’t make hits, then the strength of your back catalogue is irrelevant - except as a bargaining chip when the time comes to sell out to a healthier rival.

For Zynga, the only route out of their current predicament is to start producing some genuinely exciting, high profile and appealing new games - preferably games which lead on the mobile platforms. My suspicion, sadly, is that neither of those things is in the company’s DNA. Social gaming may see its first truly high-profile casualty before long.