Zynga Inc (NASDAQ:ZNGA) will definitely not want to remember 2013 as its best year. The social gaming company witnessed a strained relationship with its long-time partner Facebook Inc (NASDAQ:FB). It had to shut down several popular games. Zynga Inc (NASDAQ:ZNGA)’s quarterly revenues declined about 30%, and the number of active monthly users declined from more than 300 million in September 2012 to less than 150 million in September 2013. Zynga Inc (NASDAQ:ZNGA) also saw a management upheaval in 2013.
Zynga is moving in the right direction
However, not everything was bad for the company. Some of its popular titles such as Zynga Poker, Farmville, and Farmville 2 continued to show resilience. Its new CEO Don Mattrick brings vast experience from Microsoft Corporation (NASDAQ:MSFT) and Electronic Arts Inc. (NASDAQ:EA). He can help the company bounce back in 2014, demonstrating a robust growth.
As we reported earlier, the new management is coming up with strategies to reduce operating expenses and launch better games. As a result, Zynga Inc (NASDAQ:ZNGA) announced to reduce its workforce by 520 employees, which will save the company about $70-75 million. A big problem with Zynga Inc (NASDAQ:ZNGA) is that social games have a very short lifespan. And their sequels have even shorter life. So, Zynga Inc (NASDAQ:ZNGA) needs to frequently come out with mind-boggling games just to maintain its user base. The new CEO Don Mattrick is focusing on more engaging and sustainable games that could potentially improve the retention rate. Zynga Inc (NASDAQ:ZNGA) has also expanded its reach to role-playing games with the release of Battlezone.
Online gambling still important for Zynga
But Zynga Inc (NASDAQ:ZNGA)’s decision not to enter the U.S. online gambling market hurt the company, especially because the real money gambling offers huge growth potential. Zynga Inc (NASDAQ:ZNGA) has already launched the online gambling businesses ZyngaPlusCasino and ZyngaPlusPoker in the UK. Despite its decision of staying away from the U.S. online gambling market, Zynga Inc (NASDAQ:ZNGA) can still grow very well if it strengthens its international business. H2 Gambling Capital said that global real money gambling was worth $30 billion in 2012. The market is expected to reach $36 billion by the end of 2015. Even if Zynga Inc (NASDAQ:ZNGA) gains just 2% of the total market share, it will add more than $700 million to its revenues.
Zynga Inc (NASDAQ:ZNGA) shares plunged 0.13% to $3.88 at 11:27 AM EST.
