The online gaming world is becoming more lucrative by the day. In 2009, online gaming firms raked in more than fifteen billion dollars, which later rose to over twenty billion dollars in 2010. However, the earnings that any given company is able to derive from this market will depend on the company’s business model and marketing strategy.
Moreover, technological developments in other sectors of the internet such as social media in addition to the level of competition from other gaming firms will also affect the company’s profitability. It is due to this confluence of dynamic factors that some gaming firms will succeed in this market while others will fail. A good example of an online gaming company that has been having a rough patch in terms of earnings is Zynga.
A Brief Overview of Zygna’s History
Zynga is an online provider of social games. It began operating in July 2007 with San Francisco, California as its headquarters. The games developed by the company work on mobile platforms such as iOS and Android. Zynga also has games that work on its own website, Zynga.com and on social media websites such as Tencent, Google+ and Facebook. Some of its best-known games include FarmVille, Zynga Poker and Chefville.
It is important to note that FarmVille alone has more than ten million active users on a daily basis. Overall, Zynga has more than two hundred and sixty five million active users each month. Here are a number of challenges that Zynga faced in the past year or is currently facing now.
Challenges That Zynga Is Currently Facing
To begin with, the revenue losses last year were astronomical. More specifically, the company’s quarterly revenue fell by a whooping thirty percent. This dramatic drop in revenue came about because of a shrink in its users. These users shrunk from three hundred million users in 2012 to less than one hundred and fifty users in 2013.The drop in users means less and less revenue for Zynga. Therefore, Zynga must address this issue with the utmost urgency if the company is to provide a high level of return for its stockholders.
In addition, the company has strained relations with some of its business partners. For example, a strong partnership blossomed between Zynga and Facebook. More than eighty percent of Zynga’s revenue comes from Facebook users. Likewise, Zynga generated more than twelve percent of Facebook’s total revenue in 2011. This made Facebook the most important business partner that Zynga had for the duration of the partnership. However, this partnership ended in March last year, casting a shadow on Zynga’s future profitability.
Moreover, Zynga’s management structure is not as solid as it needs to be for a company that handles more than two and half billion dollars worth of assets. For example, the company laid off more than eighteen percent of its workforce on June 3rd 2013. It closed it offices in Dallas, Los Angeles and New York. Soon after, three top executives at the company resigned. The resignations were in response to the appointment of Don Mattrick as the CEO of Zynga.
All of these challenges make it hard for anyone to know whether the company will succeed in its endeavours or fail. However, it is also good to look at the opportunities that this company has. Here are some of the opportunities that are open to Zynga, now and in the future.
Opportunities That Are Open to Zynga
Zynga is strengthening its business partnerships with game-oriented companies. This is important because Zynga’s core business function is developing online gaming products for its users. A focus on partnerships that can actually help the company to develop these products is a move in the right direction. It is important to note that these partnerships now focus on enhancing user experience on Zynga’s own website and on mobile platforms such as Android and iOS. This means that the company is moving away from the over reliance it had on Facebook for its revenues.
The business partners that are responsible for helping Zynga to develop its website gaming portal i.e. Zynga.com include Majesco Entertainment, Portalarium and 50 Cubes. On the other hand, business partners that will help it develop games on mobile operating systems include Atari, Crash Lab, Fat Pebble, Sava Transmedia, Phosphor Games Studio and Digital Legends Entertainment.
The company is also introducing new games into the market. These new games will help it to recapture some of its old users. It may also lead to new sources of revenue as well as user retention. FarmVille 2, a sequel to the original FarmVille, was the most notable game released by Zynga in 2013. This game offers its players a new and thrilling three-dimensional experience. This new experience is partly responsible for the game’s top ranking in the social games chart in both the United States and the rest of the world. As you can now tell, these new games can actually help Zynga to regain its past glory.
Zynga’s new management also injects a new breathe of life into the company especially in terms of management style and experience. Zynga’s new CEO, Don Mattrick is both experienced and well qualified. His management style is more employee-friendly but results oriented as well. Mattrick was the Interactive Entertainment President at the Microsoft Corporation before joining Zynga. Mattrick was also the CEO of Electronics Arts Inc.
The company now has a lean staff, which is both manageable and less costly. This was only possible after the company laid off more than five hundred and twenty employees on June 3rd 2013. The layoffs mean that Zynga can now operate efficiently. For example, the company now makes substantial savings on its operating budget that it can then use to develop new products for its market.
The founders and executives of Zynga noticed that games alone might not get them the level of profitability that they want. This is why Zynga has now diversified into the online gambling market. Here is an overview of its online gambling games.
Zynga’s Online Gambling Ventures
Zynga wants a piece of the online gambling market. This market is worth more than four hundred and seventeen billion dollars annually. Zynga now owns ZyngaPlusCasino and ZyngaPlusPoker in its pursuit of a foothold in Europe’s online gambling market. These two online gambling platforms are at present exclusively for the UK market. In the United States, Zynga now owns Zynga Poker, originally known as Texas HoldEm Poker.
Currently, Zynga Poker has over thirty-eight million players. This makes it the largest poker website in the world. It is available in over eighteen languages and Users can play it on Facebook, MySpace, Tagged and Google+ on Android as well as iOS. All of these statistics indicate that Zynga has a high potential of making a lot of revenue from the online gambling market but only if everything else remains unchanged.
Zynga’s business model was not viable. This is why the company is facing numerous challenges. Therefore, the current restructuring processes at Zynga will do the company good. No one can be certain of its long-term prospects. However, the recent changes in its management, cost structure and gaming products point to future profitability.