Facebook CEO Laments the State of Gaming

Facebook CEO Laments the State of Gaming

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Mark Zuckerberg says gaming on Facebook "isn't doing as well as I'd like."

Odds are that when you think about games on Facebook, your mind immediately goes to stuff like FarmVille, CityVille and other such mindless "cow-clickers" whose first-and-foremost priorities are to monetize the whales. There are actually Facebook games that don't suck, believe it or not, but it's not an unfair assumption to make given the way the popularity of those games was so enthusiastically trumpeted not all that terribly long ago. But things haven't been going all that smoothly as of late, and even the big dog at Facebook has admitted that Facebook gaming hasn't unfolded quite as he'd hoped.

"Overall, gaming on Facebook isn't doing as well as I'd like," Zuckerberg said during today's third-quarter earnings call. Facebook posted a net loss for the quarter but his comment may have had more to do with yesterday's ugliness at the once-mighty Zynga, which has seen a precipitous decline in its share value in the face of ongoing quarterly losses and yesterday implemented major layoffs across its Austin and Boston studios. Zynga is, or at least was, the engine that drove gaming on Facebook, but Zuckerberg emphasized that while it may be in decline, things are actually looking up elsewhere.

"The reality is that there are actually two different stories playing out here. On the one hand our payments revenue from Zynga decreased by 20 percent this quarter compared to last year. But the interesting thing is that the rest of the games ecosystem has actually been growing," he said. "Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the past year since payments has been adopted. This evolution is pretty encouraging,"

Encouraging, perhaps, but Zynga is such a major component of gaming on Facebook that any decline will require serious growth elsewhere to offset. Facebook revenues were up 32 percent for the quarter to $1.26 billion but it still suffered a quarterly net loss of $56 million, compared to $227 in net income over the same quarter in the previous year.

Sources: CVG, Android Authority

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I don't know about you but I kept hearing the sound of a bubble beginning to burst (in another 3-5 years or so).

He's not Lamenting the state of gaming, he's lamenting the state of Facebook >(

Andy you came out swinging with games and haymaker'ed me with economics. Not cool bro.

Lets see how well that sector of Facebook is doing in 2-3 quarters. Face down in the water I hope.

And here I was thinking the title meant gaming as in gaming, not gaming as in mindnumbing point-and-click undaventure.
Well, no matter the joke I had ready for that now, this is already one in itself.

This is what happens when you don't invest in innovation and instead choose to squeeze out that last bit of juice from what is essentially a passing trend.

Right, Zucky?

I think I almost prefer when CEOs lie to us and tell us how excited they are to be bringing us the next year of sequelitis. It's bullshit sure, but at least it's mildly amusing bullshit.

So where did Operating Costs increase? If Revenue increased and they still suffer a Net Loss that means there was an increase in the cost to run the site. Perhaps there are a lot of people using the site and not gaining the company any money because they dont play the games or play and dont pay.

Either way I think that if anything Facebook will just need to encourage more advanced and detailed games being used throughit's site. Possible through deals with publishers to implement services like Waypoint or Elite through Facebook and making older games available to users.

I dont think Facebook (Or at least the Facebook model) will be falling any time soon. I think social networking is here to stay for the foreseeable future.

I tired some Fb games, but ultimately I stopped because the whole "nag your friends to come play in order to proceed" ended up turning me off than anything >:[

Doom and Minecraft both can run in web browsers. Can you contact the right people Mark Zuckerberg?

SlamDunc:
So where did Operating Costs increase? If Revenue increased and they still suffer a Net Loss that means there was an increase in the cost to run the site. Perhaps there are a lot of people using the site and not gaining the company any money because they dont play the games or play and dont pay.

I remember almost no accounting from the one course I took in it, but aren't there a number of factors that could add to a net loss other than operating costs? Anything from interest payments to more taxes to depreciation. And I think dividends might be factored in too?

I don't think a $56 million quarterly loss could've been caused by too many people not paying enough for games; people wasting money on FB games seems like the sort of thing that wouldn't change so drastically so fast.

Ah, to hear the lamentation of the (slowly) failing Facebook.

I must've done something good in a previous life :)

captcha: we go forwards
Indeed we do, cappie. Indeed we do.

Aw, the billionaire thinks Facebook games and mobile apps fall under the umbrella of "gaming".

It doesn't really seem like he's lamenting the state of gaming on Facebook, just that it's not making as much money as he expected it to.

Toilet:
Aw, the billionaire thinks Facebook games and mobile apps fall under the umbrella of "gaming".

They do, actually. Just not in a terribly appreciated fashion. A soccer mom who pushes her inevitable psychotic breakdown away by farming crops on FarmVille can be classified as a casual gamer. Same with the Bookworm Adventures-playing secretary.

They're deriving pleasure out of an activity that has a set of rules and internal conventions. Ergo, games. There's a lot more to gaming than indie or hardcore titles.

On the other hand, I'm of the mind that it's high time the casual crowd learned that there's more to their guilty pleasures than clicking on letters to make words or clicking on crops to make virtual cash. Someone mentioned Zuckerberg reaching out to Mojang or id Software; and I say why the Hell not. I'm sure being able to integrate Facebook into Minecraft (and not the other way around) would be interesting, so long as they don't gut the basic product to a third of its actual worth and stuff everything else as freemium DLC.

"You want redstone to generate? That'll be five dollars for ten hours, plox."

Or Classic Doom. Or Quake 3 Arena. You want Map X? Pay up.

There, done. And it's a lot less soul-crushing than clicking on cows.

and I lament the current state of social interaction, Mark, but that's life.

dyre:

SlamDunc:
---

I remember almost no accounting from the one course I took in it, but aren't there a number of factors that could add to a net loss other than operating costs? Anything from interest payments to more taxes to depreciation. And I think dividends might be factored in too?

I don't think a $56 million quarterly loss could've been caused by too many people not paying enough for games; people wasting money on FB games seems like the sort of thing that wouldn't change so drastically so fast.

Net Loss essentially means that the company lost more money than they gained with in a period of time (In this case 3 months.). Paying off loans would mean cash is being used but it is less of a liability which is generally a good thing. Taxes have there effects too but tax I think that it is calculated after Gross Profit, not income so it would be a percentage of that.

After looking at the Income Statement I think it is safe to say that their loss is probably not so much a pure loss as one designed to increase revenue in the future. They spent over 4 times as much money on R&D as they did in the last quarter and about three times as much on 'Selling, General, & Admin. Expense' which sounds like it means the money they spent on Marketing, building expenses and Staff. So either they increased wages a lot, hired some people or had large increases in the maintenance of buildings, vehicles and equipment.

Looking at the Balance Sheet it shows that they have enough Cash on Hand and Short Term Investments that they could cover their Liabilities several times over. It also seems they are in an all around better position than they were in the previous quarters and seem to be doing better.

The greatly increased Goodwill & Intangibles seems to indicate that they have spent money on improving it and may have tech they are working on.

I cant really analyze Cash Flow as I do not know much about that (I am still a student.).

People saying that this is the beginning of the end of Social Networking do not really understand that it is not always a terrible thing to suffer a quarterly loss. In fact most companies will occasionally suffer one and new companies usually lose money for a few years do to high start up costs.

Captcha: 'She loves Him' Well Facebook says there married so I wold hope so. Not sure if 14 year olds can get married though....

Edit: The page I am looking at actually says it was a 157 Million Dollar loss for the quarter so my source might be wrong if this article is correct.

Why does he call it an "ecosystem"? Does Facebook exist at the bottom of a petri dish?

Gatx:
It doesn't really seem like he's lamenting the state of gaming on Facebook, just that it's not making as much money as he expected it to.

Yeah, basically lamenting the state of the amount of money he's no longer making off of Facebook's gaming sector.

I'm not sure Zuckerberg would understand real gaming if it rolled him for his wallet in the stockroom of a Wawa.

So what idiot in your team thought spamming everyone with 'game notifications' counted as as interactivity. Because I just call it frigging annoying. None of your games on facebook have endeared themselves to me because they're nothing more than in-facebook spam mail.

If you maybe advertised the good games in a better way (as I am aware some exist) then maybe you'll see more favorable reactions than everyone rolling their eyes and promptly blocking all game spam in their notification box.

People use facebook for a specific purpose. Mostly to be a social whore, but really they only wanna see messages that pertain to them, it's a vanity most humans succumb to. So when we see the little red icon and see: MARTHA X-NAME wishes you to join BLAHGameville and collect 8 turnips and add a watering can to her pile of shit! With NO incentive to, YAY.'

A little part of you deflates and you instantly are against whatever Blahgameville is. Regardless of knowing what it's about and how it plays.

I haven't read all the comments, so I'm probably parroting somebody else, but this article title is kind of misleading. I thought it would be an article about Zuckerberg lamenting the state of gaming as a whole, not gaming in the context of Facebook. Those are two very different things. I was actually sort of interested in reading what he said.

Regardless, I remember when I would constantly see notifications that 'this friend played that game. Why don't you play, too?!' and I just ignored it and prayed they would stop. Then they did. I have a few things who still play very infrequently, but I can see why he'd be disappointed with it: it has definitely dropped off in popularity over the last little while.

Also: anyone else slightly creeped out by that picture? That face he's making... It looks like he's getting a happy ending from someone just out of frame, or something. Not a flattering picture, Marky.

zuckerberg looks so close to my cousin.. i hate my cousin

At this point his best bet is to get Facebook integrated into mobile games that exist outside of the site itself. People don't go to Facebook for their casual fix anymore Mr. Zuckerberg.

kiri2tsubasa:
I don't know about you but I kept hearing the sound of a bubble beginning to burst (in another 3-5 years or so).

such is the life of all social networks. nothing new there. we saw same with the megacities, myspace, msn and many other services. and im proud to never been a member of most of them (i used google groups for work and msn for gaming)

Strazdas:

kiri2tsubasa:
I don't know about you but I kept hearing the sound of a bubble beginning to burst (in another 3-5 years or so).

such is the life of all social networks. nothing new there. we saw same with the megacities, myspace, msn and many other services. and im proud to never been a member of most of them (i used google groups for work and msn for gaming)

Problem is that anything that replaces FaceBook will be just as fadtastic. The majority of people simply use it to keep track of family members or friends without needing to call or write them. That's what I use it for. Never played a game on it, never will.

Whatever replaces will do the same thing, perhaps more efficiently, but the same thing.

NameIsRobertPaulson:

Strazdas:

kiri2tsubasa:
I don't know about you but I kept hearing the sound of a bubble beginning to burst (in another 3-5 years or so).

such is the life of all social networks. nothing new there. we saw same with the megacities, myspace, msn and many other services. and im proud to never been a member of most of them (i used google groups for work and msn for gaming)

Problem is that anything that replaces FaceBook will be just as fadtastic. The majority of people simply use it to keep track of family members or friends without needing to call or write them. That's what I use it for. Never played a game on it, never will.

Whatever replaces will do the same thing, perhaps more efficiently, but the same thing.

Yes, it will, and it will keep doing so until we have implants and gps tracking. You dont need it to keep track of family, thats just an excuse. besides, were not talking about you and me, were talking about majority of humanity.

 

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