Zynga Raises Forecast Losses to $105 Million for Q3 Financials

[Shawn Zipay]

Preliminary figures released by Zynga for their third quarter financials don't really paint the company in a positive light. Zynga expects between $300 million and $305 million in revenues. Net losses are expected to be between $90 million to $105 million.

The company asserts that the loss is due to the planned writeoff of half of their acquisition of OMGPOP.

"The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction," said Zynga CEO Mark Pincus. "We are continuing to invest in our mobile business where we have one of the strongest positions in the industry. These actions support our strategy to transition from being a first party web game developer to a multiplatform game network. We remain optimistic about the opportunity for social gaming and the power of our player network of 311 million monthly active users."

Expectedly, stock prices in Zynga were down 20% following the announcement by the company of the forecast losses. In looking towards the future, Zynga's CEO Mark Pincus outlined where they expect the company to go in Q4.

"So why are we lowering 2012 guidance? There are a few factors contributing to a weaker than expected outlook for Q4. The reduced performance of some of our live web games is continuing to impact results and we have several new games which are at risk of launching later than expected."

(via GI.biz)

[K-16]

Dear Zynga,

Really? Zynga are you seriously surprised? I'm impressed you managed to trick the majority into playing clones of other games, and even succeeding in casino games when that is one of the most oversaturated markets I've seen (makes modern warfare games look sparse in comparison). However, has it ever occurred to you that ad revenue isn't helping you very much when people keep uninstalling your games?

Ads only work when people look at them willingly. And virtual asset sales models work when they are reasonably priced for a reward that doesn't banish free players (you're not supposed to setup an aristocratic society in a F2P game). Guess what? You're a failure in both of them when it comes to running what used to be OMGPOP's games.

You're doing fine in your own games, because most of us are unaware of the original titles you cloned, but OMGPOP has their own ****ing community! In other words, they know what good service was like before you took over and increased the frequency of ads to irritating levels. Did you even have a single playtester when you raped Draw Something? Did any playtester tell you how much the ads interfered with gameplay when it happens during gameplay?!

But where did you fail in the VAS model? How about the fact that it hasn't changed? You expect people to pay you while continuing to choke on the massively increased ads?! How about lower prices in exchange for ads, or one/no ad in exchange for purchasing in-game currency? Oh too risky towards profit loss you say? Well, I'm sure your stock price is agreeing with you right now.

Ads are fine in conjunction to a virutal asset sales model, but have the customers be willing to click on it rather than get in their way of their fun. You'd be amazed at how negative reception can affect your software titles' performance. Also, your 311 million monthly active users mean everyone has a cloned account so that means jack **** (especially poker players who prioritize getting the upper hand in winning virtual money). See, people who play games would know this and will spread this information to anybody who is considering in buying your stock.

I'm not saying you are downright evil as a company, because you have an established business model that is perfect for people who aren't gamers or have any creativity/experience in interactive entertainment, but I am saying communication with customers is unfortunately a requirement if you want to figure out why certain titles aren't performing (customer feedback also determines product lifespan; something I wished many Korean developers paid attention to). For starters, try including OMGPOP titles in your customer forums if you're going to ignore them in the Apple App Store/Android marketplace comments section.

Disappointingly your's,

Pretentious Armchair Business Poser


P.S. I'm glad the quick reply allows vertical spacing. I was getting sick of doing a full edit after posting once with the quick reply (I don't know why I never used the "Go Advanced" button back then though).

P.P.S. The photo GamesIndustry International is using for their article has got to be THE best trollface I've ever seen in real life. What kind of board of directors hires a troll for a CEO?