Zynga Q2 Financials: Profits Crater, Active Users Melt Away

Zynga Q2 Financials: Profits Crater, Active Users Melt Away

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Real money gambling is off the table.

Don Mattrick can talk bullish about Zynga's future if he chooses, but on paper there's not much to smile about. The Q2 financials indicate that, whatever those "bad habits" Mattrick talks about may be, they result in losses the like of which no company ever wants to see. A Q2 drop in revenue of 31% year-on year, with bookings down 38% year-on-year and a net loss of $16 million, would seem to be very little reason for Mattrick to lead off with "the next few years will be a time of phenomenal growth in our space and Zynga has incredible assets to take advantage of the market opportunity." That sounds more like a 'the end is nigh' moment, but then nobody's about to pay me a king's ransom to lead Zynga back from the cliff edge.

And what a dizzying edge it seems to be; advertising revenue's down 33% when compared to the same period last year, and 25% of its daily user base - that's 13 million people - decided not to bother this quarter, and stopped playing Zynga's games. Those aren't numbers that make accountants smile; if nobody's there to make a microtransaction, or to watch an ad, Zynga's revenue base flat out doesn't exist. But if those accountants were hoping to get into real money gambling - a prospect Zynga has been flirting with for a while now - they're going to be disappointed, as Zynga has abandoned all its efforts in that direction, at least in the US. "While the Company continues to evaluate its real money gaming products in the United Kingdom test, Zynga is making the focused choice not to pursue a license for real money gaming in the United States," says Zynga. "Zynga will continue to evaluate all of its priorities against the growing market opportunity in free, social gaming, including social casino offerings."

But then, this is all bad news from the pre-Mattrick era. It's possible the ex-Microsoft guru can make a difference. "Zynga does have talent, resources, and a real chance," thinks Gartner Research analyst Brian Blau, "but it first must refocus on its core capabilities, make the transition to mobile, and build out its platform before we start to see improvement in their bottom line." Mattrick clearly agrees with this assessment. "The market opportunity around us is growing at an incredible clip," he says, "It's also clear that today we are missing out on the platform growth that Apple, Google and Facebook are seeing." Now we just need to see whether or not Zynga's new boss can turn this situation around.

Source: Zynga

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Add Kinnect!
Then it's sure to do a 180!

So, he jumped from a ship on fire that looked like it might sink to a ship already under about 20ft of water? This guy really knows a thing or two about job stability.

OT: Zynga's problems are with its own business model based around a problematic consumer base. Theirs not much that can be done besides a complete restructuring. The social games market moves too fast to predict. See Snapchat and Drawsomething on iOS.

Karloff:
Don Mattrick can talk bullish about Zynga's future if he chooses..

I choose to read 'bullish' as 'bullshit'.

They may well be looking into it but I've not seen an explanation or their thoughts on why this has all happened. Never mind though eh? Transition to mobile, become one with Facerosoft Goopple.

Ruley:
So, he jumped from a ship on fire that looked like it might sink to a ship already under about 20ft of water? This guy really knows a thing or two about job stability.

OT: Zynga's problems are with its own business model based around a problematic consumer base. Theirs not much that can be done besides a complete restructuring. The social games market moves too fast to predict. See Snapchat and Drawsomething on iOS.

Zynga's paying him quite well though. For the kind of money they offered him, I too would read some Marty Kaan - House of Lies - inspired marketing jargon about "growth, talent, opportunity, being ideally positioned" and what have you.

arent these games an exploitation of the free to play market?
where if you pay for all the extras (that would take forever to collect if you played normally) would cost you about 60?
maybe Joe publics just getting wise to it, i suppose it was a new-ish phenomenom with FB etc bring it right to the home

Mr Ink 5000:
arent these games an exploitation of the free to play market?
where if you pay for all the extras (that would take forever to collect if you played normally) would cost you about 60?
maybe Joe publics just getting wise to it, i suppose it was a new-ish phenomenom with FB etc bring it right to the home

pretty much. they rely on skinner boxes to keep their players for the most part and eventually people either wake up to it, get burned out or as they are casual games go play something else

The biggest joke of an executive in the gaming industry joins up with the biggest joke of a company in the gaming industry and they honestly believe they can get back to doing serious business? That's probably the biggest joke of all.

It's ok, Don Mattrick will turn it all around with his Exec-speak and an army of buzzwords. Zynga will be back to ripping off other games in no time!

Zynga's market shares are plummeting? this is cause for a celebration!

Zynga needs to die. The poor people working for them must be hoping Don fixes things. Can you imagine going to a job interview with Zynga is your previous employer? -.-

I will adopt a "wait and see" approach to this. Dislike him if you will, the man has shown himself to be capable of generating revenue in the past. And that's is what business is all about, whether you like it or not.

Don Mattrick to the rescue! But in all honesty, I hope Zynga tanks. There are better, well thought-out games in the mobile market than anything Zynga has to offer. The only reason they got popular in the first place is because of people like my grandmother playing Farmville like crack on Facebook. They had to have known that was a temporary cash flow.

Shouldn't that be "Revenues Crater"? Zynga already cratered the profits a while ago. Either that or they're going for a double crater combo.

It's important in this day and age to sift through the morass of pessimism and fear mongering in the media and try to find something uplifting to brighten your day.

Hey look: Zynga is having financial problems.

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Hopefully this whole saga has generated enough shame, job-losses, ill-will, anger and frustration that gaming companies might actually learn from it. Yes the top executives of Zynga are fantastically rich still. Yes they are still very likely to have acted illegally, committed fraud and go away with it (for the time being). But they've created such a spectacular mess doing so that i think the "Quick buck social games" thing might be seeming less and less attractive.

Let me also say one other thing. Fuck you analysts. We all saw this coming for YEARS yet you kept going on about 'embracing the new reality of the industry'. The cheap microtransction vehicles are losing users and the bubble has burst. That's all this was; froth and noise.

If you want to build something in the games industry you still have to at least have some shreds of talent and creative ideas.

"Zynga does have talent" ~Don Mattrick

Now i see why they hired you. They saw you lying about the Xbox One and though "Man this guy is good"

So, seems like zynga didn't learn anything with the Guitar Hero/Rock Band games bubble.

They deserve it. Absolutely terrible company with disgusting business practice. Yet, I feel bad for the workers who simply do their job. They aren't to blame.

And gamers rejoiced everywhere

Ruley:
OT: Zynga's problems are with its own business model based around a problematic consumer base. Theirs not much that can be done besides a complete restructuring. The social games market moves too fast to predict. See Snapchat and Drawsomething on iOS.

This is really the only thing you need to say about Zynga.

Trying to form an entire company around social games entirely built around microtransactions means that you'd either have to hope you can keep hooking the customer base or that the customer base doesn't grow up or get out of the trend. It's like investing your entire revenue in 3D technology and hoping that people don't get so annoyed by having a headache that they drop it.

So this company is having financial problems and the way to solve that is paying tens of millions to the one guy who almost single-handedly cratered the Xbox reputation?

I guess it'll be interesting to see where Don goes once Zynga is in the bottom of the Ocean.

Zynga became big in the first place because it was a pioneer in a new platform, Facebook gaming. Facebook gaming is just a bubble that is bursting like the .com bubble. The internet didn't go away after the bubble burst but it shrunk and threw out or weakened many companies. The same will be true of social site gaming.

Teoes:

Karloff:
Don Mattrick can talk bullish about Zynga's future if he chooses..

I choose to read 'bullish' as 'bullshit'.

They may well be looking into it but I've not seen an explanation or their thoughts on why this has all happened. Never mind though eh? Transition to mobile, become one with Facerosoft Goopple.

Holy crap. I read that as bullshit, because it fit so perfectly. Also, JUST DIE ALREADY YOU 3 HEADED MONSTER! BE SLAIN! BE GONE! GIVE US BACK OUR PRINCESSES! (If there is any).

Ruley:
So, he jumped from a ship on fire that looked like it might sink to a ship already under about 20ft of water? This guy really knows a thing or two about job stability.

He also knows that CEO in front of your name ensures that no matter what happens to the company, he's guaranteed financial stability for life. Something a Project Leader does not have. Everyone at Zynga is there just to pad out CVs, nothing more. They know where the train is going.

Ruley:
So, he jumped from a ship on fire that looked like it might sink to a ship already under about 20ft of water? This guy really knows a thing or two about job stability.

So the next step would be to end up clinging to the iceberg and dying of frostbite then? I'm liking this analogy more and more...

good, a one sinking ship full of feces are going to drag a stinking captain down with it!

Teoes:

I choose to read 'bullish' as 'bullshit'.

In this case it roughly amounts to the same thing.

 

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