Why Zynga is failing
blog.sfgate.com
blog.sfgate.com
I see this with my kids (all under 12), they crave more interesting gaming than they did a few years ago; they do still play skinner type games occasionally, but more often they are searching for higher quality content.
This is cool! It makes me hopeful for gaming.
(overheard in a recent interview with Alan Kay on testing out new interfaces with users, which is problematic because they get keep getting familiar with it! The remark was by the interviewer, actually)
Plus, ahem, I also kicked a Mafia Wars addiction years ago that has left me totally disinterested in trying another variant. :)
This I think is Zynga's real goal.
Math. I don't think it means what he thinks it means. All I see here is "proof by picture" with some stretched definition of "proof". The only relevant part of this entire piece was this:
>Because when something is easy to build and sell — and appears to make money — a lot of people are going to gold rush the market and drive your margins into the ground. Now there are a million alternatives.
The low-cost gaming industry makes money off one-hit-wonders. You can't consistently manufacture one-hit-wonders.
You don't need to consistently manufacture one-hit-wonders, just enough to make up for the losers. A lot of businesses are like this. Investing in startups, producing movies, etc, etc. And there are stars in each industry that do seem to magically consistently manufacture one-hit-wonders.
My initial reaction is that this is the same kind of knee-jerk reaction that says Facebook is somehow doomed and irrelevant.
I think this is good and worth reading, but the title is hyperbole, and if they're actually concluding that Zynga is done, it's premature. The term "right-sizing," used in another article quoted here, is at best manager bullshit; however, it's not necessarily wrong in this case.
I dislike many of the things they do and have done, but "napkin math," particularly prefaced by "basic," is pretty much Tarot card valid. Like so many unsavory companies and ventures of questionable value before them, Zynga has a serious user/cash/revenue base, and it entirely remains to be seen whether they're just hemorrhaging value or whether they're actually making moves that will keep them solvent and push their business forward.
> I don’t think Zynga fades into the sunset. They are going through tough times, but they’re not done. Zynga still makes money. (In fact, they could do a smart pivot and get into the data center game, though that is another race to the bottom.)
I read all the knee-jerk reactions to Facebook and Zynga as the next IBM/Yahoo/etc. They not the monsters they used to be. Now they have to find a way to exist in a world that no longer revolves around them.
This is a right sizing of the company and its revenues to reflect the games they own, once you take away the cheap/free traffic.
Zynga games are typically low-RPU, mass appeal, which as you mentioned relies on cheap traffic (mostly from other Zynga games.) You can only keep shuffling people internally from one game to another for so long until they all leave for Candy Crush Saga.
I am not sure why Zynga is struggling, but I am certain it is not because social+in-app games is a failing business model.
For these big social gaming companies that got to where they were because of hits, the real challenge is in following up and keeping the growth going.
None of the surprisingly profitable breakout games mentioned here have been particularly expensive to make - Kixeye's three released games were supposedly built with very small teams, same with Supercells' enormously successful Clash of Clans and Hay Day.
Zynga is still making money. Lots of it. They just got too big too fast and had unrealistic expectations of their market's ability to sustain their games. Granted, user acquisition costs are much higher than they were before, partially as a result of Facebook making their viral channels more difficult to use... but IMO Zynga would have had these problems regardless.
The problem is the market itself was never as lucrative as it was made to seem and it's shrinking fast. I can't say a whole lot about that last part, but let's just say Zynga isn't the only social gaming company laying off staff to refocus on mobile...
And because top apps are listed by MAU, rather than revenue, you miss the mid to hardcore segment that is very profitable. Kixeye and Kabam are in the 9 figures range and growing.
The market is wide open. That's not why Zynga is strugglign though.
I love it when non-technical people underestimates the task of pushing / building a new product. (or technical people who consistently super underestimate the tasks in hand).
Good luck with "reskinning" a game in a weekend.
In a social game, the back-end has to scale for insane growth, your users might be going from 100 users to millions of users in days.
That said, a citation or refutation would be useful, I could be remembering wrong.
You clearly don't understand why Farmville was a success then.
If they had created an MMORPG or something like Eve Online which would evolve through time then maybe they would stand a chance with this model of income. But then again you can’t make that kind of games on Flash.
Just a few examples of games that make the majority of their funds from virtual goods:
League of Legends(the most played game worldwide right now) DotA 2/Team Fortress 2 Maple Story Planetside 2
It's actually generating a huge amount of cash. WoW just wasn't ever set up for it, and still to this day sells around a total of 15-20 virtual goods products IN TOTAL. Most services that rely on it for revenue have that many at release, let alone years down the road and long into maturity.
WoW never had tens of millions of subs. They peaked at 12m. They made over 100k in the first day of selling their first virtual good (the infamous star pony). Their next MMO is rumored to be virtual good based model, based on the success they have seen in WoW and DIII.
Until the entire category of social games dies globally, I'm not going to entirely count Zynga out (as much as the misanthrope in me would love to see Pincus bite the dust).
Besides, Zynga still has the online gambling play coming up for them, which could be a serious game changer if adopted in the States.
I've seen my acquaintances on Facebook, playing less and less games, sending less and less invites. I'm connected to a lot of regular non-technical folks on Facebook and I barely see any traces of games in my feed, whereas 1 or 2 years ago, my stream was chocked by games.
Zynga games seemed like fun. Users stayed for a while for whatever reason. However advancing the game by pressing buttons to increment counters is simply not fun. Once the novelty passes, you start realizing what a stupid game it is.
There's also a new breed of games on iTunes. Games that require slightly more skill, but after the first level or 2, they become next to impossible to advance unless you pay up or spam dozens of your friends. Again, at some point users realize that the game is not at all about skill or fun, but about willingness to pay up.
Basically this new breed of games is depending on new users for survival. At some point the market will get saturated by people that tried these games out and that have grown tired of them.
Also, what the hell does social mean anyway? 10 years ago, social meant to play CounterStrike or StarCraft with your high-school buddies, games that are still played by groups to this very day. Does social mean spamming your friends with annoying invitations? Or does it mean multi-player games where you and your friends can have fun together? I'm asking because I'm seeing a lot of the former and not much of the later ;-)
Zynga may have too many games, employees, and expenses, but the category has plenty of life yet.
- spam your friends or pay
- asynchronous trade
- visiting each other
- multiplayer features introduced slowly over time
- promoting the creation of groups and structured relationships among players
- automatic interaction with other players
- any combination of these
It normally does mean avoiding things like these:
- synchronous play
- highly competitive or highly skilled play
The above should cover 90%+ of the social gaming spectrum without entering value judgements.
Spamming your friends, buying FB gold, visiting your friend's stupid farm, these are not fun activities, these are just actives required to advance in a stupid game that involves incrementing counters.
When I'm thinking of what social should be, I'm thinking of chess, or strategy games, or Monopoly, or whatever that involves playing against other users, instead of a computer. It doesn't even have to be synchronous multiplayer. Chess doesn't have to be synchronous. You can have turn-based strategies or RPGs (as in Heroes of Might and Magic, which used to be pretty fun). You can have games where the users themselves establish what the game is.
But companies like Zynga went the other way around, focusing on the virality aspects, instead of those aspects being a side-effects or an add-on to a fun game. These games are broken by design.
Just like with any new industry, there's the concept of user saturation and quality bar being raised. Pong was revolutionary and industry-formative in 70s.
This is not to say the article has nay false assertions but liking them to Zynga's failure may not have any lessons for you and me.