) is taking a dive this morning after Facebook (NASDAQ:
) amended its agreement with the company, allowing the social
network to develop its own games. If this announcement had
involved any other game company, investors wouldn't have taken
notice. Facebook said that it currently has no plans to make its
own games. And even if it did, there are no guarantees that the
venture would be successful.
The problem is that Zynga relies almost exclusively on
Facebook to distribute its games. Apple's (NASDAQ:
) App Store and Google Play (NASDAQ:
) may be promising alternatives, but few consumers are interested
in paying for Zynga's games. Most simply want the free-to-play
content offered by the likes FarmVille and CityVille. And while
Zynga could simply jump ship and move its software to another
platform, consumers are frequently exposed to these games because
of Facebook. Without the social network, Zynga would lose out on
a mountain of free advertising. It would also lose its primary
Zynga declined as much as 10 percent in pre-market trading,
marking the company's most prominent decline since October. While
the losses have leveled off slightly, Zynga is still trading down
more than seven percent this morning.
From November 1 through November 29, the company gained more
than 17 percent. This was somewhat of a surprise for the ailing
game publisher, which has been spiraling out of control ever
since its IPO.
Despite the gains, Zynga has yet to recover from its
three-month decline of more than nine percent. The company
experienced its steepest drop from March 2 to August 2, at which
time Zynga lost more than 81 percent of its value. Year-to-date
the FarmVille maker has declined more than 72 percent.
The social games company continues to lose millions of players
every month. From October 1 to October 24, Zynga lost
24 million players
. At that time Zynga had 316 million Monthly Active Users.
, Zynga now has 301 million MAUs.
Players were not the only thing Zynga lost in October. The
axed more than 100 jobs
after it closed its Boston office and eliminated two-thirds of
its employees in Austin. Despite the massive layoffs, Zynga.com
plethora of new jobs
in San Francisco. It is not clear if the positions are
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