Is the era of FarmVille domination over? The creator of that popular online social game as well as a slew of others is facing some big problems, after Zynga’s stock opened 40% lower today than yesterday. Its putting some of the blame on the decline on its partner on the farm, Facebook, for changing up the social networking platform.
“We saw declines in engagement and bookings for our Web games due in part to changes Facebook made to their platform,” CEO and founder Mark Pincus said on a conference call, reports USA Today.
Facebook depends on Zynga for 12% of its revenues, so any financial woes at Zynga are bound to have troubling consequences for the social network. And apart from just Zynga and Facebook, the slide could signal worsening problems for the social media gaming world at large.
People nowadays are shifting to the mobile world of gaming, instead of playing social games on a computer at home. And underperforming games like DrawSomething, which Zynga bought for $180 million a few months ago, also don’t bode well for the company’s future unless it adapts quickly. It’s trying to attract more users to its own site, smartphones and tablets to play games, and away from social media.
“There has been talk for a long time about social gaming being a fad, and we may be seeing some of those suspicions come to fruition,” Paul Verna, gaming analyst for eMarketer told the paper. “Zynga had plenty of hit games and a good run, but that’s not happening now.”
As for how much Zynga’s stock slide will hurt Facebook, we’ll find out after the markets close today. Facebook is scheduled to release its earnings report this afternoon, its first since the May IPO. It might be time for Facebook to figure out other ways to make money other than social gaming. And whatever it comes up with to bridge that revenue gap will likely prove interesting to its users.
Facebook earnings due Thursday, after Zynga loss [USA Today]