Zynga Posts Big Loss to Start 2012
The first quarter of 2012 has been very rough on social games giant Zynga, with the company posting a large loss and internal strife casting doubt over the future of the company.
Zynga, the polarizing social gaming developer, has posted a loss to begin the 2012 year. The loss comes from the period from January to March, despite the company’s revenues rising by 32% over the same period. Zynga’s total revenue was $321 million, with their gross revenue from virtual goods and ads coming to a new record for the company, at $329 million. User numbers were up, Zynga recently launched six new games, and eight of the top ten games on Facebook were owned by Zynga. Zynga is also planning on launching its own social gaming platform in order to reduce its reliance on Facebook’s platform. With all these positive numbers, the revenue loss seems to be incongruous.
On the other hand, Zynga recently acquired the developer OMGPOP, makers of the wildly popular social game Draw Something. The move came shortly after Draw Something topped Zynga’s Scrabble clone Words With Friends, with 12.2 million concurrent players. Reports indicate the sale was somewhere around $180 million, although no exact figure has been released.
The acquisition of OMGPOP has caused some amount of strife and division internally at Zynga, with reports that many insiders, including the company’s founder, are looking to unload their stock in the company. The strife stems from disagreement about the future direction of the company, with dissenters saying the company should stick with what made them successful in the first place: social games on Facebook and other social networking platforms.
Currently, Zynga is looking to end their reliance on Facebook’s platform for their business model, with a new focus on developing mobile games like the iOS versions of Words With Friends and Draw Something, although history shows that many of the social networks that have grown up in the past few years looking to dethrone Facebook have either failed or been swallowed up into Zuckerberg’s giant. Only time will tell if the same fate will befall Zynga’s attempts.