Zynga Inc (NASDAQ:ZNGA) zooming away from U.S real-money gaming

Posted by Chris Bell July 26, 2013 0 Comment 402 views


Zynga Inc (NASDAQ:ZNGA) has changed its mind. At one time, the company was keen on launching real money online gambling. But something seems to have changed and the company is all set to abandon its efforts of building on this concept in the U.S. When this idea had first surfaced, many investors very strongly believed that that real money gaming would add the spark that would light the Zynga embers.

The announcement came as a surprise as the company reported that it had bled 40% of its active-users in the Q2. Aggressive rivals have managed to attract its Zynga’s clientele which has left the company flailing desperately.

The boss speaks

Microsoft Corp Xbox’s ex-boss, Don Mattrick, who is now at the Zynga helm said that it is time for the company to retrace its steps to the basics. He is projecting 2-4 shaky quarters as the company is in now in “reset” mode. In a statement, the gaming company said that it is making a concerted decision to discontinue with pursuing its real money gaming license in the U.S.

U.S regulations stringent

At one point, Zynga had promised its investors that it will be tapping into a seemingly lucrative revenue stream and that it would launch real-money gambling games across the world. The effort was launched in Britain this year. However, real money gambling is still illegal in various states in the U.S. The possibility that it’s first planned online poker game would get caught in a regulatory web, could not be ruled out.

Unearthing long-forgotten roots

At a point when the company has lost endorsement from Wall Street biggies, it really can’t afford another gamble. Its business model came crumbling down in under two years. Zynga’s rivals managed to outrun it in the mobile gaming segment. That’s how company executives had veered towards the idea of real money online games. But both Mattrick and Pincus want the company to return to the grassroots and focus on games like FarmVille.


About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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