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Zynga Backs Out Of Real Money Gaming In The U.S.

Zynga-logoThese are not particularly happy times for Zynga; the company which led the way in mobile gaming in the early days of the smartphone appears to be losing players and revenues at an alarming rate.  To add to the woes it has also taken the strategic decision “not to persue a license for real money gaming in the United States“.

Mark Pincus was the founder of Zynga and he remains the chairman and chief product officer but at the end of June 2013 Don Mattrick took over as chief executive with a view to restoring the company to it’s former glory.  Mattrick was previously the head of the Microsoft Xbox gaming unit and after taking over stated that the firm needed “to get back to basics and take a longer term view on our products and businesses“.

Mattrick certainly has his work cut out, Zynga has seen a 40% drop in monthly average users year on year and a 38% drop in revenue for this year’s first quarter compared to the same period in 2012.

Zynga built it’s user base with game’s such as Farmville and Zynga Poker but more sophisticated games from other publishers have taken the centre stage and Zynga now finds itself struggling to develop titles which make it into the top ten most played on Facebook, the social platform which was the driver behind it’s early growth.

The disastrous purchase of OMGPOP for $200m in 2012 was an early sign of the desperation coursing through the company and Mattrick will be looking to stabilise the wobbling ship before trying to rebuild the brand and the image.

Part of that stabilisation process appears to be the decision to pull out of real money gaming in the United States; the test bed is the UK market and that experiment will continue but the UK is a mature, tolerant and well-regulated environment while the US is in the early stages of regulation in just a few states.  The decision has not been greeted well by the financial markets who viewed the move into real money gaming as a possible way out of the company’s nosedive; in the short term it may be the right move but longer term Zynga are effectively cutting themselves off from a gigantic new market.

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