back to article Zynga plays BLAME GAME with Facebook as stock tanks 40%

Online gaming outfit Zynga has partly blamed competition being opened up on Facebook's platform for the maker of Farmville having to revise down its outlook for the year. The company, which claims some 300 million monthly users, is also struggling to quickly release new games onto the market. We are lowering our outlook to …

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Devil

Captive Users

The revenue forecasts and therefore stock quotations of both Zynga and Facebook are built on the presumption that FB users are 'captive' clients and that the user base can only grow. Clearly this is not the case and users will quickly move on to the next shiny new thing, especially younger people to whom the original FB demographic (who are now 30-somethings like yours truly) are now old fuddy-duddies

It seems like sooner rather than later the penny will drop for investors.

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Re: Captive Users

I don't agree that FB users will move on. It's too big for that now. It's like saying Google can be supplanted in search. Theoretically yes, in practice no. On top of that FB has become the defacto authorization mechanism on the web. So many sites now require a Facebook account. FB is firmly here to stay. That doesn''t mean it's valued at stupid amounts or that they can profit as much as they hope from their users.

But Facebook is big, real big. And most of it's user base don't have the privacy concerns that the more technical readership of TheRegister does. In fact Facebook has replaced Google as their starting point to the web...

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Re: Captive Users

ZweiBlumen, nothing, nothing, is too big to fail. You've said it yoruself, facebook has replaced Google as "the internet" for most people, which means Google is starting to lose mindshare, which means in turn it will gradually stop being "search" for a lot of people, which in turn means something will replace it. It's as inevitable as the human species one day disappearing.

Everything dies. That's life, and it's a rule that applies as much to giant technology behemoths as it does to dinosaurs.

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Re: Captive Users

@ZweiBlumen

Of course people are going to stick to their Facebook accounts for quite a while, if nothing else because they have made it their login token for quite a few other sites. The problem is, Zuck 'n' Zyng doesn't make any money unless people actually use their respective main services. As the Facebook fanaticism begin to wear off Facebook could easily find themselves in a situation where the number of users continue to rise, but the overall usage drops as other forms of communication dig into the market share.

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Google != Facebook

The difference is that FB, and particularly gaming on FB, are hardly valuable services. While it might have been fun to plant purple cabbages and mink your pixel cow in Farmville for a while, even the most devoted follower must surely get bored and stop playing.

Google, OTOH, provides search, email, maps and other v useful stuff. Sure MS Bing could theoretically fill the void.

One could argue that Google (and lesser search engines) actually provide the true "semantic web" where you can use human readable text, rather than URLs to access the www.

FB, and Farmville in particular, are voids that do not really need filling. If all the purple cows vanished the pining would not last long.

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Re: Captive Users

Yeah, but Google will be around for many years yet. Decades even. I don't see Facebook disappearing in the next 20 years.

As for "nothing is too big to fail": As we all know now, the banks are definitely too big to fail. So there are some things in that category.

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Anonymous Coward

Re: Captive Users

"On top of that FB has become the defacto authorization mechanism on the web. So many sites now require a Facebook account."

That's news to me; never seen such a thing. I think you're confusing "the sites I hang around" with "The Web".

FB is big so long as: a) People want to share photos and some other content online, AND b) have no easier method than uploading them to a website.

As it becomes less and less necessary to do "b" in the future as increasing peer-to-peer systems become built into phones (and probably clothes eventually) and ip6 makes it possible to associate access nodes with individuals FB will fade away.

Google provide a service that is multi-platform and until someone comes along with a better database and a decent way to search it (eg, ignore Wikipedia pages automatically) they're fairly safe. The key difference is that a database is a thing the challenger has to create by their own effort, whereas what is undermining FB is being created by the steady continuation of trends in computing that have been visible for 30 years and more.

At the current share price FB is grossly overvalued and that will never change; they have shot their bolt and made their fortunes so why would Zuk care anyway?

Google could be killed by a clever program (oh, happy day!), but at the moment there's no sign of that while the writing is already on the wall for FB.

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WTF?

Re: Captive Users

The only application I have that wants a FB login is spotify. Luckily I have an old spotify account and don't need a FB login. Other than that though I can't think of anything that makes FB the defacto authorisation platform. It can disappear tomorrow and the web will get by just fine.

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Re: Captive Users

Zwei, you're wrong. The banks failed spectacularly, which is why they're being propped up with tax money right now, and storing up a whole world of pain for all of us in the process.

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Mushroom

@ZweiBlumen Re: Captive Users

Remember when Yahoo was THE place for search and apps? Remember when mySpace was the only place for social networking?

Neither Yahoo or mySpace lost market share because users lost interest, they lost because declining revenue forced changes that resulted in less users.

And Facebook looks to be on that trend. Their earnings are slowing and their stock price is a Wall Street joke. Worse, Facebook has lost some of it's "cool" among teens because their parents are joining. Teens are now moving to Twitter, but there exists a void between Facebook and Twitter and some startup is going to obsolete them both. Hey, it's the Circle of Life!

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Rob

Games on Facebook

I think the majority of the people I know on FB who plays games are all fickle users. They play a game for a short period of time then get quickly bored and move on to another one, of course each time they do this they try and drag all their friends into the game as well, ultimately it's all short lived.

I get the feeling that this is another tech company that has based it's earnings and market share on the wrong set of analytic's and it will eventually all come crashing down around them.

Don't get me wrong I know there are folk out there that will play these games longer and also spend money on the in game items etc but I only know of a couple of those types.

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Anonymous Coward

Re: Games on Facebook

Zynga have been messing people round on their own servers too... .changing things for no reason, basically making it so that to have any chance of progressing in a game you have to spend money with them. A lot of the gamers playing Zynga games are casual users so when they're faced with having to spend real money to progress in a game and know that they'll have to do it again in a few days they do what you'd expect and walk away.

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Anonymous Coward

Re: Games on Facebook

Yep - Zynga keep messing on with the servers, user interfaces and spamming people. And we are very fickle users. I play, from time to time, the Zynga Poker - I am not a frequent, every day user. I just play it (or any game for that matter) to relax.

The issues I've had is that;

1. The introduction of gold coins and purchasing items with real money for virtual items and tokens. I refuse to buy tokens/chips for that. I've found that even when you hit 0 - you just walk away.

2. E-mail and privacy. I've found that I can disable (thanks to Facebook for once) the posting to my profile (and there are lots in Zynga). Also - disabling the e-mail. I was getting frequent e-mails stating user X wants help on this challenge etc..

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Oh noes is the bubble about to burst?

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Anonymous Coward

It did

Now it's more of a case of who's going to be left to pay the bill.

Short-selling types will make a fortune from companies like this.

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FAIL

My heart bleeds...

purple piss.

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Re: My heart bleeds...

Mine would too if it wasn't as black as coal.

*also, great phrase, never heard another person use it outside the gnomes family until now. +1 to you Sir

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Trollface

1.4$ M profit Q2 2011 equates to...

2.3$ Billion market capitalization today, AFTER that 40% drop.

Puts a whole new spin on the words 'Value Investment'.

Seriously, 2 or 4 billions for the twats that send you Farmville-related spam every time one of your buddies fires it up?*

Who's counting?

* yes, "hide all Farmville posts" works fine on FB. Too bad you have to opt out in the first place.

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Mushroom

Oh what short memories people have

http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus-faceboo/

http://techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/

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Devil

Quel surprise

Typical Zynga gameplay mechanic:

10 Click on something

20 Wait

30 GOTO 10

I can't imagine why people are losing interest.

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WTF?

In fairness

That mechanic is the same as ever game since games started to use the mouse.

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Anonymous Coward

Good news for privacy

Them and Facebook were a good match in their disdain for privacy laws, so hurray as far as I'm concerned.

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FAIL

This is the company that employs clinical psychologists to better exploit it's 'game' players?

#plays world's tiniest violin#

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Meh

On the other hand

It just could be that their so-called "games" are more like work than fun. In other words, they suck.

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WTF?

Incredible...

They paid US$200 million for Draw Something. Two. Hundred. Million. Two.Hundred.Fucking.Million.

I keep staring at that, then pause to consider the product, their only product. Then I stare at the figure again.

I haven`t taken any hallucinogens for a while, so it can be me that`s addled...

These people must be on some seriously fucking grade A coke to believe that this can all turn out well.

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WTF?

Moooo

$332m doesn't pay costs of operating online games?! Either they haven't realized that they can simulate the game in computers without using actual farmland, or somebody is pocketing a lot of money.

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FAIL

Stock Fraud?

In April, Zynga conducted a "secondary stock offering" in which insiders dumped 43 million shares of stock at $12 a share, raking in about $516 million.

Yesterday, four months later, Zynga reported a horrible quarter, and the stock plunged to $3.

In other words, Zynga insiders cashed out at exactly the right time.

In fact, they cashed out in the same quarter in which Zynga imploded.

http://finance.yahoo.com/blogs/daily-ticker/zynga-insiders-cashed-just-stock-crashed-144334658.html

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Re: Stock Fraud?

Well, it is a games company. The people running it ought to know how to win games. Looks like they just won one. (One's won one once oneself, hasn't one?)

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Not paying attention

Zynga need to grow up fast. They've entered a very competitive, and very difficult market, and are behaving like they know everything about it, whilst the veterans in the market are sitting there and laughing their asses off.

The reason why many game companies haven't entered the 'casual' game market, or the mobile game market? Because the profits don't exist. People who play farmville are into a fad. They will move on to the next game quicker than they can blink. People who play games on Steam however? They will go back to playing those games over and over, and then buy the new ones when they come out as they look forward to the uniqueness of each, and the quality of them.

People don't want to play crap forever.

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Thumb Up

But I have 52 million shares!

What's 52 million times zero?

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Does anyone know if

The initial customer base has finally ran out. By that I mean people they have run out of people who could be potentially interested in this game. I think this happened to Battle Pirates because the game died when they started releasing copy paste mediocre content.

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