
Zynga loses $15.8M in Q2, nearly half its daily users year-over-year - bentcorner
http://www.polygon.com/2013/7/25/4557406/zynga-loses-15-8m-and-nearly-half-its-daily-users
======
dakrisht
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.

~~~
comrade_ogilvy
The niche is growing and will continue to grow into the foreseeable future. So
making a good profit is possible.

However the competition is heating up quickly to nuclear fusion temperatures.
_Every_ useful app or silly game on every smart phone is effectively a direct
competitor -- Zynga needs people obsessing on very certain games for hundreds
of hours, enough time to punch in real dollars on the whim.

Furthermore, this is an inherently unsticky kind of niche. Every customer will
need to be won over again in 12 months or less, as they tire of that one
charming game.

The stock is going to crater...

~~~
dakrisht
_Furthermore, this is an inherently unsticky kind of niche. Every customer
will need to be won over again in 12 months or less, as they tire of that one
charming game._

Full agree with this statement. If you look at titles like Candy Crush, sure,
they're doing amazing right now, pulling in huge numbers (users and revenue) -
but in 3-6 months - they won't be around. Retention will switch over to the
next 45th copy of Bejeweled.

It's actually a very interesting model. The same games are re-created by new
"startup" companies every few months. 1/100 hits and becomes a Top-10 item in
the app store. The game gets huge traction by leveraging FB's massive user
base, company puts together obscene numbers showing engagement, in-app
purchases, growth projections (which end up diving after a few Q's) and then
go out and raise Series-A rounds.

What I CAN'T figure out is - are VCs really this dumb to invest in companies
that won't be around in 12-18 months? Maybe they're not, maybe it's the VC
model that's flawed. Invest in 100 companies @ $1.5-3M per and 1 will go
public or get acquired and we'll make our money back. But this is an entirely
different conversation.

~~~
psuter
It's like watching fireworks and thinking "ooh I really think that purple one
is different!".

~~~
dakrisht
This is how most VC's and kids calling themselves "entrepreneurs" these days
see the world.

If I have to hear one more idiot with an app or another 56th version of a
similar service like Instagram say they're "changing the world" I might lose
it. Ha!

------
moutarde
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.

~~~
CmonDev
Jetpack Joyride is another clone of Temple Run. And Halfbrick are not that big
and rich.

~~~
russellsprouts
If that's true, then Jetpack Joyride and Temple Run are both clones of the
helicopter game, and every 2d platformer is the same.

------
ChrisNorstrom
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
[http://www.escapistmagazine.com/news/view/96024-Zynga-CEO-
Ad...](http://www.escapistmagazine.com/news/view/96024-Zynga-CEO-Admits-to-
Being-a-Scammer)

------
jejacks0n
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.

------
chinmoy
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."

------
Vivtek
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!

------
hillary55
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.

------
jsmcgd
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.

------
jfb
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.

------
27182818284
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.)

------
likeclockwork
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.

------
AndyKelley
Good riddance.

~~~
dakrisht
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
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-...](http://tech.fortune.cnn.com/2013/01/17/how-king-com-crushed-
zynga/)

------
panabee
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).

~~~
rdl
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
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
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
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
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
> "buying sinful industries in general, but particularly on bad news/dips"

Interesting model; haven't ever thought about it like that.

------
alexnewman
And the afterhours trading is crazy

------
wilfra
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
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
Mattrick's track record of the last 4 months vs. his 31 years of success in
the game industry.

------
koft
Worst companies for employees

