Why Zynga is failing

Although there are compelling changes in the gaming ecosystem described in the article, there's a pet theory of mine I wish to forward: people can become resistant to skinner box addiction. We get bored with just simple mechanics, eventually.<p>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.<p>This is cool! It makes me hopeful for gaming.

Napkin math?<p>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:<p>&#62;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.<p>The low-cost gaming industry makes money off one-hit-wonders. You can't consistently manufacture one-hit-wonders.

While I love the snark... <i>is</i> Zynga "failing?"<p>My initial reaction is that this is the same kind of knee-jerk reaction that says Facebook is somehow doomed and irrelevant.<p>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.<p>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 think this misses the point entirely. Zynga is not failing because their products are cheap to recreate. Plenty of companies, in tech and beyond, have easily recreatable products but do just fine. Zynga is "failing" (if you can call it that) because they depended on cheap user traffic from Facebook - both through free virality and later cheap ad buys. Facebook is maturing as a business and ad prices are going up. And Facebook realized that all that game spam was just not worth the 30% vig they charged (probably the hard way - through testing for user engagement). Take away those temporary advantages and Zynga is just like any other gaming company.<p>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.

Supercell makes two social games that generate more revenue than all of Zynga. Had Zynga created these hits (or bought Supercell early), then the story would completely opposite.<p>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.

One issue with Zynga that I haven't seen explored enough is that the cost of making a Zynga Facebook game has increased dramatically, while the potential revenue from the same Facebook game has not. Zynga tried to apply their own version of AAA quality to games like CastleVille, and the result was that they spent a ton of money and still didn't make as much as they did with FarmVille (a game which took six weeks to create). Same problem with Mafia Wars 2 and FarmVille 2.<p>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.<p>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.

I think the key point is that the Zynga formula was easy to recreate, and so competition entered and started to splinter the market pie up. Basic market economics principle.

I think they're just too damn big. Zynga should be a 100 or 200 person company. They'd be a <i>very</i> successful company with that kind of overhead. They simply scaled up far in excess of what their long-term business could support.

<i>"Social games didn’t cost much to build. In fact, once you had the underlying code and frameworks — provided the game’s play and goals were roughly the same; earn points/money/whatever — you could turn “Sorority Life” into “Mafia Battles” by just switching the graphics and text, a staggeringly cheap process called “reskinning.” (Doable in a weekend) Bam, another product to push. "</i><p>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).<p>Good luck with "reskinning" a game in a weekend.

Zynga had always felt like a fad to me. I just never saw any long term value. Oculus Rift though, there's a gaming company i'd actually put some money in. They have creative people, some kind of barrier to entry, and a real passion for the industry as opposed to a pirate mentality Zynga always seemed to exhibit.

I wonder what the corporate culture is like at Zynga, and if it promotes creativity and innovation with its developers. I suspect it doesn't, and that that is the real reason it is failing at creating good new casual games.

Hmmm...I don't know. I look at Zynga and feel like it is/was in a position to really continue succeeding. Games may be easier to build but it's still difficult to get users. Zynga should have been the best at building cross-platform. Zynga should have moved much more forcefully off Facebook (I never really understood the idea of going to Facebook to play Farmville). Zynga should have been snapping up/copying cool new games before they got too big. True, it is a hits business to some extent but there is a lot more you can do with data and an installed base/captive audience.

Virtual goods are a small byproduct of the gaming industry. You can’t expect to make serious money from them. Even World of Warcraft with tens of millions of dedicated <i>hardcore</i> gamers makes little money from virtual goods. And those are people who pay to buy the game and also pay for a monthly subscription, not the average freetard user of Zynga.<p>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.

Social gaming still has plenty of life in it, with Pocket Gems games, Puzzle and Dragons, and other games continuing to do well.<p>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).<p>Besides, Zynga still has the online gambling play coming up for them, which could be a serious game changer if adopted in the States.

Articles like this are generally useless. Once and event has happened people can come up with all kind of explanations citing why the product failed. There is no wisdom in it.<p>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.

Zynga did not steal away casual gamers from other platforms. They tapped the endless realm of social dynamics. As soon as facebook's growth started stalling, they should have created their own gaming network.

Zynga never did that well to begin with. It was all hype and misleading numbers. They only go down from here.

This is a gross mischaracterization of both Zynga's troubles and the industry as a whole.

Failing? the hell, this napkin math is going to be huge. Two words, Mr Hoffman, `napkin math'.