Zynga whacked as losses widen

SAN FRANCISCO — Zynga said Thursday it wants to perform better, as the social games firm reported losses widened and revenues sank in the past quarter, sending its share price tumbling.

The loss for the past quarter deepened to $62.5 million, compared with a deficit of $15.8 million in the same period a year ago.

Revenues dropped sharply to $153 million in the three months ending June 30, from $230 million a year earlier.

“While our quarterly financial results were in line with our guidance range, we aspire to do better and improve execution across our business,” chief executive Don Mattrick said in a statement.

“We are purposefully competing, and while we would like to be further along, we believe we are making the right decisions to grow our business and unlock long-term shareholder value.”

Shares in Zynga tumbled nearly eight percent to $2.69 in electronic trades after the news, reflecting investor disappointment.

Zynga also lowered its outlook for 2014 “primarily to reflect the delayed launch of new games and features,” according to its earnings statement.

The company rose to stardom by tailoring games for Facebook, but has struggled as the two firms have grown apart and Zynga seeks new sources of revenues.

The San Francisco company announced it is launching a new line of sports games under the brand “Zynga Sports 365.”

Zynga said it signed a licensing deal with the National Football League and NFL Players Inc. to use real NFL teams and athletes, “creating an authentic team manager football experience that can be enjoyed anytime, anywhere.”

source: interaksyon.com

Microsoft Xbox head named Zynga CEO

SAN FRANCISCO — Games publisher Zynga Inc has replaced chief executive Mark Pincus with Don Mattrick, the Microsoft Corp executive who headed the critical Xbox business, Zynga announced on Monday.

The news, reported first by AllThingsD, sent Zynga shares up more than 11 percent earlier in the day. The shares rose a further 3 percent to $3.17 when Zynga confirmed the appointment after the bell.

Pincus, 47, who controls a 61 percent voting stake in the gaming company he founded in 2007, will remain as the company’s chairman and chief product officer after personally helping to recruit Mattrick from Microsoft.

“Don is unique in the game business,” Pincus said in a statement. “He can execute in multiple domains – hardware, software and network, and he’s been the person responsible for game franchises like ‘Need for Speed,’ ‘FIFA’ and ‘The Sims.’”

Zynga’s business model, which relied heavily on selling virtual goods to gamers on Facebook Inc’s platform, began to disintegrate a year ago as users tired of Facebook games and shifted to playing on mobile devices.

The company’s shares have hovered at just 25 percent of its $10 initial offering price in December 2011 as Pincus has struggled to turn around the company named after his pet bulldog.

Mattrick’s new role leading a game maker that publishes social media-based titles and smartphone games will be a marked departure from the world of big-budget, packaged console games embodied by the Xbox and Electronic Arts Inc, the game publishing firm where he had worked for 15 years.

In a statement, Mattrick emphasized that Pincus willingly recruited him and described their working relationship as that of “partners.”

“I joined Zynga because I believe that Mark’s pioneering vision and mission to connect the world through games is just getting started,” Mattrick said. “Zynga is a great business that has yet to realize its full potential. I’m proud to partner with Mark to deliver high-quality, fun, social games wherever people want to play.”

Although Wall Street embraced Mattrick’s appointment, many analysts said questions remained about Zynga’s ability to produce hit games that could prop up its shrinking revenues.

“Bringing in someone who has worked at a larger company to assist in management duties I think is a relief right now,” said Richard Greenfield, an analyst at BTIG Research.

“But Pincus is still the chief product officer. So the question is, what’s actually changed day to day in terms of making hit games?”

Xbox turn around

Mattrick joined Microsoft in 2007 after spending 15 years at EA, where he worked under Bing Gordon, a well-known gaming industry executive who went on to join venture capital firm Kleiner Perkins Caufield & Byers.

Pincus and Gordon, who sits on Zynga’s board, led the effort beginning this spring to recruit Mattrick, who had expressed an interest in leaving Microsoft to lead a company, according to people familiar with the situation.

Pincus, who joins Groupon’s Andrew Mason among high-profile tech entrepreneurs who have relinquished their jobs as chief executives, publicly backed Mattrick’s appointment.

“I’ve always said to Bing and our Board that, if I could find someone who could do a better job as our CEO, I’d do all I could to recruit and bring that person in,” Pincus said. “I’m confident that Don is that leader.”

At Microsoft, Mattrick helped turn the Xbox business into a profitable venture after years of losses, eventually propelling it into the No.1 selling console in the United States.

Mattrick’s departure comes just as Microsoft gears up to launch the third version of its console, called the Xbox One. Unveiled in May and scheduled to hit stores later this year, the machine has already stirred controversy.

Gamers attacked the high price, Microsoft’s plan to require an Internet connection at least once a day and attempts to limit the sharing of used games. Last month, Microsoft reversed its position on the Internet connection and said it would allow game sharing.

Mattrick has been rumored to be departing for months. After EA’s CEO stepped down in March, industry sources speculated he was in the running to lead the top games publisher, where he previously held numerous leadership roles.

source: interaksyon.com

Facebook, Zynga revamp partnership

SAN FRANCISCO — Facebook Inc and Zynga Inc severed the cozy ties that once bound the Internet industry’s closest couple, revising a years-old partnership between the two companies.

The two companies reported in regulatory filings on Thursday that they had reached an agreement to amend a deal struck in 2010 that was widely seen as giving Zynga privileged status on the world’s No.1 social network.

Zynga stock fell 12 percent to $2.30 in after-hours trading. Facebook shares were off 5 cents at $27.27.

“Zynga’s favored nation’s status is gone but it seems like it’s been slipping away for a while now,” said PJ McNealy, CEO of Digital World Research.

The new agreement gives Zynga a freer hand to operate a standalone gaming website, but eliminates the San Francisco game publisher’s ability to promote its site on Facebook and to draw users from Facebook’s thriving social network of roughly 1 billion users.

Visitors to Zynga’s gaming website will no longer be able to tap into their network of Facebook friends or post messages about their gaming progress to Facebook.

Zynga games, like “FarmVille” and “Mafia Wars,” will still be available on Facebook’s social network, but those games will no longer feature cross-promotions directing users to Zynga’s standalone website.

The move underscores the widening gap between the two social networking pioneers, which went public within seven months of each other and have been intimately tied.

In recent quarters, fees from Zynga contributed 15 percent of Facebook’s total revenues, while Zynga relies on Facebook for roughly 80 percent of its revenue.

The 2010 agreement provided a variety of ways for Zynga to meet its monthly user growth targets, including guaranteed promotions of certain Zynga games on Facebook.

“Effective on March 31, 2013, certain provisions related to Web and mobile growth targets and schedules will no longer be applicable,” said a regulatory filing submitted by Zynga on Thursday.

The changes could benefit Zynga’s rivals who have long groused about Zynga receiving preferential treatment.

“There was plenty of speculation Zynga was getting referrals within the Facebook community that other gaming companies weren’t getting which helped drive web traffic to Zynga games,” said Digital World Research’s McNealy.

But he noted that recent changes to Facebook’s algorithm appeared to be helping drive more traffic to Zynga competitors such as Electronic Arts and KixEye.

In July, Zynga executives told analysts that the company’s revenue had plummeted in the second quarter as Facebook tweaked its algorithms, sending fewer gamers to Zynga titles. Zynga CEO Mark Pincus, at the time, assured Wall Street that Zynga was “working closely with Facebook to optimize the game ecosystem.”

Both Internet companies have been trying to reduce their inter-dependence, with Zynga starting up its own Zynga.com platform, and Facebook wooing other games developers.

“We have streamlined our terms with Zynga so that Zynga.com’s use of Facebook Platform is governed by the same policies as the rest of the ecosystem,” a Facebook spokesman said in a statement. “We will continue to work with Zynga, just as we do with developers of all sizes.”

Among the myriad terms of their new agreement, Zynga could elect not to collect revenue for games on its own website by solely using Facebook payment system, in which Facebook takes a 30 percent cut.

The game developer could also choose not to display Facebook’s ads on its own site, Zynga.com.

“Wall Street thinks Facebook is booting them off or something bad, but there’s no way this is bad,” said Michael Pachter, an analyst at Wedbush Securities. “This is at worst neutral and at best good.”

The revised agreement also allows Facebook to develop its own games, according to the filing. A person close to Facebook said the company “was not in the business of building games and we have not plans to do so.”

source: interaksyon.com

Amazon gets into online social games

SAN FRANCISCO — Online retail colossus Amazon has launched its first online social game in a challenge to Zynga.

The “Living Classics” title was tailored for play at leading social network Facebook, where Zynga rose to stardom.

“Why is Amazon making social games?, you ask. Good question!” the Seattle-based company’s newly announced Game Studios team said in a blog post.

“We know that many Amazon customers enjoy playing games, including free-to-play social games,” the message continued.

“We believe we can deliver a great, accessible gaming experience that gamers and our customers can play any time.”

Amazon’s inaugural game paid tribute to the Seattle-based company’s roots as a seller of digital books.

“Living Classics” challenges players to reunite a family of animated foxes ranging about settings from literary works such as Alice in Wonderland, King Arthur, and The Wizard of Oz.

“Players help to reunite the foxes by exploring beautifully illustrated scenes and spotting moving objects,” the blog said.

Facebook friends are encouraged to collaborate to succeed and share in rewards. The game was available for play at facebook.com/LivingClassics.

“Amazon has the kind of fire power that allows it to dominate a market quickly,” Douglas McIntyre of investment website 247Wallst.com said of the news.

“Zynga has reason to be worried about Amazon Game Studios, but so does an entire industry that is still in its infancy,” he continued.

Amazon has the capital and the online clout to “disrupt” the social games industry from small startups to established titans such as Electronic Arts, according to McIntyre.

source: japantoday.com

Zynga plans to build a gamers’ social network

SAN FRANCISCO — Zynga Inc unveiled a social network for gamers dubbed “Zynga with Friends” on Tuesday, hoping to wean itself from a longstanding, symbiotic relationship with Facebook Inc that has shaped two of Silicon Valley’s closely watched Internet companies.

The game publisher, which has been under pressure to reverse a steep slide in stock price in recent months, said its new network will pair gamers with opponents and make features like player profiles, an activity stream and chat available for all users, regardless of whether they play Zynga games on mobile devices or on desktop computers.

Zynga with Friends is “one network, one unified experience, and one social lobby that will for the first time connect all of our players, no matter where they’re playing,” Manuel Bronstein, a senior Zynga executive, told reporters at a press event in the company’s headquarters in San Francisco.

“The new social features and services are designed for the sole purpose of bringing more people to play together,” Bronstein said.

Zynga will also provide programming tools to help third-party developers publish online and mobile games based on its own software, executives said, in order to foster a Zynga “ecosystem” that will expand its slate of titles beyond mainstays such as “Farmville” and “Zynga Poker.”

Still, Zynga shares closed nearly 5 percent lower on Tuesday as investors saw little in the announcement – which included the planned social network, as well as a bevy of new game titles – to drive strong long-term growth.

The company announced “FarmVille 2,” a sequel to its megahit resource management title, as well as “Matching with Friends,” an addition to a suite of smartphone games that includes the popular “Words with Friends.”

“One of the worries is that the whole idea of social gaming seems to be waning somewhat,” said Paul Verna, a gaming analyst at eMarketer. “There doesn’t seem to be a lot of growth left, and the idea of unveiling another Ville game or FarmVille 2 – I don’t get the sense that’s very exciting to the financial investors.”

Cozy partnership

Zynga’s moves, while long expected, have stirred speculation around the future of its cozy partnership with Facebook, a company that owed 15 percent of its first quarter revenue to fees from Zynga. The two companies also confirmed recently that Facebook has begun showing ads from its inventory inside Zynga games, which are played by some 290 million people.

Meanwhile, Facebook’s reach of close to 1 billion users has helped distribute Zynga’s games and propel the publisher to a dominant position in the social gaming industry, but analysts have warned that Zynga needs to seek greater independence to sustain growth, especially as Facebook’s expansion inevitably slows.

Colin Sebastian, an analyst at R. W. Baird, said the Zynga with Friends network “is a natural step in the right direction as they leverage their technology infrastructure and user base. On one hand it might help them become less dependent on Facebook, but from a practical perspective they will continue to remain dependent on Facebook for quite some time.”

Asked to comment, Facebook issued a statement that betrayed no concern about Zynga’s announcement. “It’s exciting to see Zynga continue to build with Facebook across web and mobile platforms.”

Responding to questions from reporters on Tuesday, Zynga executives took pains to stress that the expansion of its own social network did not threaten its existing relationship with Facebook.

“We’ve had a longstanding agreement with Facebook that we would do these kinds of things,” said Reed Shaffner, Zynga’s director of product. “In no way are we trying to use that to say you have to play on this platform.”

“The idea is that we’ll help you find the best gaming friends anywhere you play,” he added.

Executives said the platform could potentially have as many as 290 million users with some 2.8 billion daily social interactions once it is rolled out, although a launch date was not specified.

Targeting mobile

Zynga acknowledged on Tuesday that it is also trying to boost mobile usage, targeting a small but faster-growing wireless device gaming market that is quickly becoming a crucial battleground for so-called casual or social gaming.

To bolster its mobile offerings, Zynga purchased New York-based game developer OMGPOP for $183 million in March.

The company said Tuesday it will also team up with Atari SA to develop games, but did not elaborate.

Zynga executives said they will provide developers a set of “application programming interfaces” – APIs – to make it easier for them to craft games using Zynga’s software.

“We’re opening our doors today and opening Zynga Partners for Mobile. We are inviting developers from all over the world to come and join our network,” said David Ko, chief mobile officer.

Zynga wants to create an ecosystem with “best-in-class mobile developers and best-in-class mobile games,” Ko said.

The company also announced new titles including ChefVille, a kitchen management game, and The Ville, a game resembling “The Sims” that allows users to build homes and dress their avatars to interact and pursue romantic relationships with other users.

Even so, analysts said Zynga, facing mounting scrutiny from investors, may need to look beyond its familiar repertoire to attract new gamers and keep existing ones hooked.

“One area where they may have disappointed people is, they are not showing any games in development that target a more core gamer, or so-called mid-core gamer,” said Sebastian, the Baird analyst. “That’s something where we’ve seen a lot of growth for Facebook, and that’s potentially a missed opportunity for Zynga.”

source: interaksyon.com