Zynga announced yesterday that a further 5 per cent of its staff – totalling 120 people – had been let go and the Boston Studio had been officially closed. The Chicago office is also being downsized and there are suggestions that both the UK and Japan based branches of the Facebook developer are also likely to be cut down to size.
This isn’t something new and surprising though. Zynga has been steadily falling from grace and financial success for the past year or so. Like Facebook, it has struggled to stay even close to its initial public offering and there are signs that the social gaming bubble which brought the company billions in value and millions in revenue, could have well and truly burst.
The problem Zynga is now facing – or at least one of them – is that social games are for the most part, free. The kind of people that would put a few quid into the game here and there have largely moved on or realised that they can get by playing once a day, without spending just to get more “energy” or some other playtime commodity. There’s also the fact that the people that aren’t playing these games, really, really don’t want to play them now, as they’ve received so many spam like “come and play” requests from their friends, that they are completely turned off from the experience.
So new players are hard to draw in and the ones the company already has are less likely to spend. It’s a diseased business model that looks set to only get worse.
As VG247 points out, Zynga has attempted to diversify, but a lot of that has been a continuation of the developer’s tactics in the past: copying other popular games. Now though, that system has really back fired, as Zynga is getting sued by EA games, one of the few companies with the industry and financial weight to take it on.
KitGuru Says: I’m sure many of you that consider yourself real gamers will be far from shedding a tea at the slow demise of Zynga. What effect do you think this decline will have on social gaming?