Zynga Falls - Could it be due to lack of Creativity?

Zynga is popularly known by everyone for their Popular Games such a Farmville, Mafia Wars, Texas Holdem Poker and the many more amazing games. However, the second quarter wasn't as promising as it should have been. Analysts predicted that the company would earn around 5 cents per share and thereby have a total revenue of around $344 million; but, the actual earnings amounted to around 3 cents per share and hence the revenue was just $302 million. 

The company isn't at a loss, but it’s below the expectations of renowned analysts and a point to note here, is that it's just the third financial report as a public company. Various sources say that Zynga blames Facebook for its decline - whether this is true or not, I can't say and it isn't what we're focusing on at the moment. We're trying to decide what the actual cause of the fall was and not blame it on another party as a whole. 

Even though the profits show a decline, the overall active players on Zynga has increased. But, the number of people buying virtual goods has decreased drastically - seems like people now prefer real life goods than Tractors on Farmville!

Facebook is changing each and every day and everyone knows it. Some of these changes are accepted with huge applauds; whereas, others aren't as welcomed. But, some of the major changes that Facebook has incorporated which resulted in fewer players returning to Zynga include:

Promotion of newer games and Apps

Rather than promoting older games and the ones that are doing well, FB chose to let the people know about the newer apps and games. This change was probably made on the assumption that: If people love it, they'd return, else they'd not want to hear more about it. However, things didn't work out that well for Zynga - especially they're older games such as Farmville and Mafia Wars.

Changes in Notifications to Users

Earlier people were notified about each and every game request from friends, as well as when they asked for something - this is what made more people join in and participate. But, as this used to irritate most people, FB doesn't force this on its users anymore - This could be a reasons as to why fewer people are now playing these games.

Zynga's Bubble Safari got a boost (The Opposite Effect)

Even though the new changes didn't help Zynga with thier older games, Bubble Safari was a huge success resulting in around 4.5 million installs on the day of its release. This could be just because Facebook now promotes new games and people are already familiar with Zynga - but, success is success. I wonder how long this will last!

Zynga isn't sitting back and letting its dominant role collapse, they've even tried to establish themselves in the Mobile market. But, they weren't quite successful mainly due to their competitors - Apple and Google.

As per human nature - anything new is exciting! Social gaming was new and Zynga was born out of it. That's the reason it grew in popularity. But, analysts now say - this bubble has burst and today, people aren't as fond of social gaming. Core gamers mock social gaming as a whole and say it can never compete with the 'ACTUAL GAMES'

Many of the top analyst’s state that the present quarterly fall could just be the beginning. There's a high possibility that it could lead to a chain reaction and cause further declines in the stock values.

After the 41% fall, many would reconsider possessing these stocks and even sell them for a small loss rather than lose a lot further down the road - Hence, the prices would fall even further and a chain reaction could begin. 

Zynga has a dynamic group of people working under them and they're definitely not going to give up on social gaming. Even though Mobile gaming isn't monetizing well in the present day, there's a high probability that it would out perform PC monetizing in the future. Take a look at what Forbes has to say after an interview with Zynga's CEO.

We all know that original and great games would perform well, but very often new games created using the same basic idea tend to outperform the original work, this is mainly because of the improvements and additional features that are added.

Farmville one of Zynga's most popular games allegedly copied ideas and a basic layout from Farm Town and all Zynga did was incorporate a few additional features so as to make the game much better and social network friendly. 

It's not once or twice that Zynga has been accused of copying games from other brands. Take a look at some of the accusations: Zynga Copied us!

Facebook relies a lot on Zynga for its profits as it gets a chunk in revenue from virtual goods bought by active players on the popular Zynga games. Since Zynga's reports weren't positive, Facebook stocks got a further hit! After all, FB gains around 12-15% of its revenue from Zynga.