Struggling online game creator Zynga (NASDAQ:
) is reassessing its business model. Chief Executive Officer Mark
The Wall Street Journal
, "I think that there's an opportunity on mobile for there to be a
connector of these experiences."
Zynga's second quarter results revealed a loss in revenue growth
from core social game Farmville. The number of Facebook (NASDAQ:
) users playing games on the site has fallen by 19 percent,
according to the report.
Adding to the company's troubles, Electronic Arts (NASDAQ:
) filed a lawsuit on Friday claiming that Zynga
copied key elements
of "The Sims Social" game. Zynga is accused of mimicking Electronic
Arts' popular game with "The Ville".
Along with legal issues, Zynga's need to enter the mobile game
market is paramount. The stock price has been getting hammered on
the Nasdaq, steadily declining from $14.69 in February to its
current price of $2.70. As the shares continue on a downward
spiral, Chief Mobile Officer David Ko has yet to figure out how to
monetize the mobile market.
Cowen analyst Doug Creutz warned investors back in June that all
of the company's major titles were declining significantly. Creutz
pointed out in the
, "We believe that consumer preferences may be switching decisively
to mobile games given that game quality is similar, if not better,
and mobile games have the added advantage of being playable at any
Zynga is not the only company struggling to make money from the
mobile phone market, as Facebook shares have been punished as well.
The social network is trying to find ways to boost its advertising
revenue through mobile presence as well. However, small smartphone
screens pose a challenge for game developers, as there is hardly
enough room for the games themselves, let alone for advertisements
to run as well.
In an interview with
, Pincus acknowledged that the social gaming market has moved
rapidly in the last 18 months. He noted that Zynga has been,
"investing and betting on mobile heavily." Perhaps more
importantly, he indicated that Zynga creates brand recognition
through building products and does not make great use of marketing
- a move that could be damaging revenues.
Zynga and the social mobile gaming space have become extremely
challenging to monetize. As large gaming competitors like
Electronic Arts and Activision Blizzard (NASDAQ: ACVI) are
struggling in the mobile arena, the underdog is having a difficult
time staying afloat.
Zynga was trading around $2.82 Monday morning, up nearly 3.9
percent for the day.
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.