With its recent $90.5 million profit under its belt, Zynga shrewdly acquired 11 online gaming companies in 2010 including Challenge Game – responsible for the hit multiplayer franchise Games with Friends. Misguided spendingĪs Zynga approached its IPO, its battle with Facebook left the company in a weak position and in dire need of a solid base of consistent revenue. Only more recently has Zynga decided to invest more time and money into diving into mobile, with successful games such as CSR Racing. This enabled King to generate massive profits in the mobile gaming market by developing smartphone apps – bypassing Facebook and its 30% flat tax completely.įailure to realise the speed of technological developments in smartphone technology coupled with the shift in users moving from desktop to mobile, ‘Ville’ titles came far too late to the mobile gaming market.
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Mostly well known for its popular Candy Crush title, King Digital Entertainment supplemented its Facebook profits by developing iOS and Android versions of its popular Facebook games in late 2012. What followed was a steady stream of app developers branching out into different channels to maximise exposure and profitability. With its primary source of attracting new customers via news feeds all but gone and losing 30% of its revenue to Facebook, Zynga’s reluctance to adapt quickly resulted in an uphill battle towards its IPO. With Facebook’s sights set on driving revenue through monetized ads, the social media platform forced all of its third-party app developers to use Facebook Credits – or virtual money – and charged a 30% fee for all transactions through it. In addition, Zynga was also selling its virtual goods on Facebook for years without taxation. However, Zynga’s practice of inundating Facebook users with an endless stream of gaming requests quickly led to Facebook revising its user settings to address this issue and users were given the option to filter out these messages from news feeds completely.
But what went wrong, and how can future mobile game developers learn from Zynga’s mistakes? Facebook changesįacebook was never created to be a gaming platform and like many other online game developers, Zynga’s top games were integrated as Facebook apps in order to tap into the huge user base of the social media platform. With an initial surge putting its stock value over $11.50, it quickly dropped below $10 and now currently sits at $3.56 – with over 60 discontinued games.
This led Zynga to a fast-track IPO in late 2011, initially being offered at $10 a share for an estimated valuation of $7 billion. This didn’t stop Zynga from pushing on, continuing to produce a wide number of various games, all integrated into the Facebook platform. In response to this immediate success, Zynga continued to produce ‘Ville’ games including CityVille, Petville, and Fishville – each with a healthy number of monthly users.īut behind the facade of its commercial success was the worrying fact that 2010 was the only year the company turned a profit – although a healthy profit of $90.5 million – and since 2008 the accumulated net losses were closer to $600 million. Within four days of its launch, Farmville had attracted over one million daily active users, and nearly $30 million in six months.įor a time, Facebook users flocked to the farming simulation game which promised SimCity-style gameplay involving the simplicities of farm life and Farmville achieved revenues of $235 million the year it was released. Nearly ten years ago, online gaming developer Zynga launched Farmville, an Adobe Flash gaming app on Facebook.
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