It amazes me how things can change so fast, especially in the tech industry. By 2010-11 social gaming network Zynga was riding high. Games like Farm Ville and City Ville were household names and kids’ hobbies. It got on the NYSE and acquired 11 companies. But today, Zynga is on the brink of extinction.
In retrospect, 2010 was the only year Zynga made a profit. The fact of the matter is, since it’s creation in 2007, they’ve lost hundreds of millions. Stocks that were once near $15 are now $3 a share. At their peak, active monthly users were over 300 million. Now, they hover around 125 million and falling. Employees are being laid off hundreds at a time. And experts say there’s no end in sight. So what happened to this once promising company? Shady and borderline shameful?business?practices are what happened. Players were offered credits and hook-ups if they accepted some offer. According to a statement by founder Mark Pincus, “…I needed revenue right now. I mean we gave our?users poker chips if they downloaded this zwinky toolbar…”. Many believe the games created where knock-offs of other video games. Zynga partnered with Facebook. But it wasn’t long before FB changed it’s policy, in part due to Zynaga’s ‘spam mechanism’. Soon, game users on Facebook dropped by 26%.
Wow, this almost reads like a Greek or film noir tragedy. All it took were just a couple of bad choices and questionable habits to unravel the whole operation. Maybe Zynga can learn from these mistakes and make a comeback. They still have some profit left. Maybe they can hire a gaming consultant and come up with an original idea, instead of borrowing from others so heavily. That’s just a suggestion. With what little revenue they have, they can use better advertising methods. Some don’t cost very much at all. What lessons can be learned from Zynga’s downfall?