Zynga Inc (ZNGA) New Management, New Mobile Strategy

zynga earnings

Zynga Inc (NASDAQ:ZNGA) has been struggling since it issued its initial public offerings (IPO), including the exit of CEO and co-founder Mark Pincus, who left the position to allow new management to give some bounce to the company from the current lows. Serious gamers do not regard social games highly, hence such games come and go like a fad. As a result, many social gaming companies tussle to remain relevant in the long run, according to a report from SeekingAlpha by Sramana Mitra.

Mitra says, “Under the new management of CEO Don Mattrick, Zynga now seems to have more of a direction.”

More focus on mobile gaming

CEO Don Mattrick is focused upon revamping mobile gaming. The company withdrew from its earlier plans of launching into thereal money gambling market, and instead is focusing more on the mobile gaming market. Mattrick feels that the real problem with Zynga’s declining user base is with ‘execution’ despite the fact that the core mobile gaming sector is still growing.

The global mobile games market is predicted to rise 27.3% annually to $23.9 million by 2016. Also, around 78% or 966 million out of 1.2 billion gamers play games on mobile. The data also shows that on an average, 368 million consumers, or 38% of total mobile gamers, spent $2.78 per month on mobile games in the past year. This spending is expected to go up 50% to $3.07 per month. Zynga is hoping to gain a strong foothold in this growing market by designing games that suit mobile gaming.

Zynga Inc (NASDAQ:ZNGA) has attained only limited success with mobile games so far. Zynga Poker is maintaining its position among the top 20 games on iOS devices, but other mobile games have not been impressive. The company appointed Clive Downie as its new COO. Prior to Zynga, Downie worked with mobile gaming company DeNA. Downie is expected to take forward mobile games for Zynga. Last quarter, Zynga rolled out CastleVille Legends for mobile, a continuation of the popular Facebook Inc (NASDAQ:FB) game.

Zynga Q3

For the current quarter, Zynga Inc (NASDAQ:ZNGA) saw a user base contraction but it performed better than the estimates, infusing little confidence among investors. Revenue, for the third quarter, dropped 36% year over year to $202.6 million, and non-GAAP revenue came down $142.7 million. Zynga posted a narrower loss of $0.02 per share compared to consensus estimates of $0.04 per share. The company reduced its losses by slashing jobs as it laid off 18% of its employees to cut down on cost.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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