Long Way To Go For Zynga Inc. (NASDAQ:ZNGA)
Though Zynga Inc. (NASDAQ:ZNGA) beat analyst expectations with regards to 3Q13 results and posted lower than expected losses, its turnaround is still under the scanner and can’t be confirmed unless the company really does something strategically right to gain back its market share and daily active user base. The consistently declining daily active user base since late of 2012 kept the company wondering so much that it forced Founder CEO Mark Pincus to step down and name Don Mattrick as Zynga’s new CEO in mid-2013.
Earlier under the leadership of Mark Pincus the company did something really amazing with launch of its most popular Facebook Inc. (NASDAQ:FB) gaming title ‘Farmville’ back in 2009. Farmville attracted 10 million daily active users just within one and a half month of its launch, following which the company launched some more games to gauge users including Zynga Poker, CityVille, ChefVille, CastleVille, Mafia Wars and FarmVille 2 among others. Though the company offers its games for free to play, users have to pay for credits to enhance the gaming experience and avail more features. The company fetch in hefty revenue of $1.2 billion in FY12. But the scenario did not last longer as the company failed to foresee the mobile transition towards smartphones and tablets and to do something to tap this increasing user base of smartphone users.
If we talk of latest quarterly earnings which the company released on October 24, 2013 it posted 36% YoY decline in revenue with 50% decrease in its daily active user base. Though it narrowed the losses to $68,000 which demonstrated significant improvement, the company is not expected to post any miraculous turnaround at least for next couple of quarters. However the new CEO Don Mattrick, a renowned name in digital gaming industry with significant professional experience working with Electronic Arts Inc. (NASDAQ:EA) and Microsoft Corporation (NASDAQ:MSFT), has launched strategic measures including more user centered gaming experience and mobile transition along with strategic executive changes and job cuts. Those expecting Zynga’s turnaround need to wait for new game launches and response they receive by the active users upon the launch.