Here’s a plum fact about the video game industry: in 2010, Zynga was valued above Electronic Arts. So successful were the likes of FarmVille and Mafia Wars, so smitten with the ease of spending on the booming Facebook social network were players, that the little, privately owned game company was worth more (according to industry analysts) than the company making Madden NFL and FIFA Soccer. By the time Zynga made its initial public offering at the tail end of 2011, investors anticipated a worthwhile moneymaking opportunity. What’s that they say about the stars that burn brightest? Zynga is shutting down a handful of once-successful social games after reporting yet another year of tepid earnings.
Revenue fell from $329 million during the first quarter of 2012 to just under $264 million in 2013, with net income of just above $4 million. For those not following the game maker’s stumbles on the NASDAQ stock exchange, those numbers mean that Zynga beat expectations but by a hair, and investors are not happy. Shares plummeted 11-percent after the latest earnings call and haven’t yet recovered. Zynga said that the coming year will be one of transition; the plan is to introduce new games to pick things back up, but the company’s primary means of recovery right now seems to be closing down as many games as possible.
Zynga COO David Ko confirmed during Wednesday’s earnings call that it was closing down four social games that were at one time pillars of the company’s business. These include Facebook titles The Ville, Empires & Allies, and Dream Zoo as well as the company’s foray into China, Zynga City, on the Tencent gaming platform. It also confirmed the cancellation of two unreleased games that were meant to be a big part of its future. CEO Mark Pincus said those games would have brought “better short-term performance” but they wouldn’t have provided long term stability.
The biggest cancellation is The Ville, the game around which allegations of plagiarism that have dogged the company coalesced. It was The Ville’s perceived similarity to Electronic Arts’ The Sims Social that finally led to the filing of a lawsuit that many saw as a long time coming. As Maxis boss Lucy Bradshaw wrote at the time, “This is a case of principle. Maxis isn’t the first studio to claim that Zynga copied its creative product. But we are the studio that has the financial and corporate resources to stand up and do something about it.”
Ironically, neither The Ville nor The Sims Social will still be in operation come June, as Electronic Arts is bowing out of Facebook gaming. This doesn’t mean that gamers have nowhere to turn on Mark Zuckerberg’s social network, however. The market is simply proving that Zynga’s approach to empire-building was flawed at the outset. These new cancellations are just the latest. Fourteen other Zynga games have been shut down since December 2012; eleven in that month alone and then three more in February.
