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Social Gaming Giant Zynga Reports Falling Profits

Rivals Seek To Salt The Soil Of FarmVille Creator

Unwanted FarmVille requests are one of the great scars on the modern world, certainly up there with mass religious persecution and childhood malnutrition. Not only do they clog up your Facebook timeline, but to have a notification buzz in your pocket only to find that it’s someone asking you to help them raise virtual corn is an egregiously cruel emotional bait and switch. You thought someone liked you, but it turns out that they only want you as a cog in their virtual agrarian capitalist enterprise. In many ways, FarmVille encompasses much of what is wrong with post-industrial society.

That is why many people may feel a degree of schadenfreude upon hearing the news that Zynga, the company behind FarmVille as well as many other social media-based games like Mafia Wars and Café World, has seen a drop in revenue of 34%. Their revenue was $153 million, with a net loss of $63 million compared with $16 million last year. Wall Street reacted accordingly to the news, with the company’s share price dropping 7% to $2.39.  

Zynga has struggled with a variety of issues over the last year. The accelerating pace of the transfer of most social media activity to digital has affected them adversely, since many of their games don’t translate well to the smaller screens of the smartphone. By failing to innovate in this area they have been beaten to the punch by mobile-orientated developers like King (whose game Candy Crush is a huge hit, the most downloaded Apple store app of 2013) and Supercell (who made Clash of Clans, the third highest game in terms of revenue generated on the Apple and Google Play stores).

The company has been hit by multiple copyright lawsuits, with many people claiming that their games are simply thinly veiled versions of those produced by smaller companies. Zynga denies this, saying that there are a fundamental set of mechanics which all games of that kind are built on. Beyond this they have launched lawsuits against other game makers, claiming propriety right to the suffix ‘-ville’ in regard to social media gaming – a move which has won them few friends in the industry.

In 2012 they were also the subject of an insider trading class action lawsuit alleging that co-founder Marc Pincus, along with other members of the company, were permitted to sell shares before releasing disappointing Q2 figures.

Ever since the very earliest social media based games like Warbook attracted hundreds of thousands of players even in Facebook’s infancy way back in 2007 (aeons in the world of digital development) the fight for the attention of this lucrative demographic has been fierce. The precipitous rise of Zynga demonstrates just how much is at stake in this market, and potential rivals will be eagerly eyeing up the possibility of another falling giant.

Douglas is an English Literature graduate who has written about everything from music to food to theatre, now a content creator for Social Media Frontiers. No topic too large or too small. Follow him @DouglasAtSMF.

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Social Gaming Giant Zynga Reports Falling Profits Reviewed by Anonymous on Friday, August 08, 2014 Rating: 5
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