CastleVille is a hit but Zynga’s overall user numbers continue to stay flat, which could be problematic for the company’s planned IPO.

It only took CastleVille two weeks to rack up 17.4 million users, giving it the sixth-biggest audience on Facebook, and it’s currently running neck-and-neck with Zynga’s popular FarmVille with just over seven million daily active users. That’s a win no matter how you look at it, but it may not be enough of a win to turn around Zynga’s fortunes, as the boost in numbers it brought for November was largely offset by sliding interest in the company’s other games.

Zynga put out five new games over the five months between June and October, yet the company’s overall DAU numbers actually slid from 49.2 million to 46.9 million. “While DAUs have ticked up slightly over the last month, given the launch of Zynga’s most important new title for the year, CastleVille, the modest increase in November has to be a disappointment,” Cowen and Company analyst Doug Creutz said. “The lack of real DAU growth appears to be partially a function of general overall erosion in the DAU base for Zynga’s older titles and partially an acceleration of user churn since the launch of CastleVille.”

One of the biggest problems facing Zynga is that most of the interest in its new releases appears to be coming from people already playing its older games rather than new users, which limits the potential for real growth. Creutz also noted that interest in Zynga games appears to be peaking and then trailing off faster with each new release; Mafia Wars 2, which came out in October, hit its peak just eight days after launch, while DAU growth for CastleVille went from six million in the first week to 900,000 in the second.

Zynga’s planned IPO is already looking a bit frayed thanks to concerns about its reputation and corporate culture and this certainly isn’t going to help. From a practical perspective, it might be even worse; “corporate culture” is an ephemeral concept that can be remolded [or suppressed] as needed to keep the investors happy, but a business plan that’s hit a wall and has nowhere to go but down is far more troublesome. “We think Zynga has yet to answer the question of how it intends to grow its business from this point forward, a key question in front of its attempt to launch an IPO,” Creutz said.

Sources: GamesIndustry, Gamasutra

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