Still can't figure out, month after month, how this lousy company is still in business. Some truly mind-blowing stuff here. Zynga folding is now expected. Mattrick will be gone in < 90 days and then the ship will finish it's descent into deep waters. Unfortunate for the employees who have been (and are being) laid off. But this company has always been a model for failure. Ripping off and blatantly copying games to monetize briefly using FB's platform and then leveraging the temporary growth into huge VC investments to quickly cash out and disappear is the epitome of scum leadership and vision.
This company has always been and always will be a pure scam. Period.
Zynga is one of the worst company's for ripping off other people. If ever there was a company whose grave I wanted to dance on, then Zynga would be it.
I'm the last guy to be harsh on people, but if you joined Zynga and you had a choice to go somewhere else, it's kinda your own fault. Personally, I have some standards a company needs to live up to for me to want to work there... Not saying I'm a "rock-star" and can choose wherever I want to work, far from it, but I still wouldn't take a job at Zynga unless I was long term unemployed.
The ones I feel bad for are the incidental employees: the people working at the front desks, the secretaries, some of the HR people.. all of those people for whom Zynga is just another relatively unremarkable company. They don't have a part in the unpleasant aspects of the company, and could hardly be expected to evaluate the company before deciding to work there. If they start losing their jobs, they will be the only employees there I feel bad for.
The niche is growing and will continue to grow into the foreseeable future. So making a good profit is possible.
However the competition is heating up quickly to nuclear fusion temperatures. Every useful app or silly game on every smart phone is effectively a direct competitor -- Zynga needs people obsessing on very certain games for hundreds of hours, enough time to punch in real dollars on the whim.
Furthermore, this is an inherently unsticky kind of niche. Every customer will need to be won over again in 12 months or less, as they tire of that one charming game.
Furthermore, this is an inherently unsticky kind of niche. Every customer will need to be won over again in 12 months or less, as they tire of that one charming game.
Full agree with this statement. If you look at titles like Candy Crush, sure, they're doing amazing right now, pulling in huge numbers (users and revenue) - but in 3-6 months - they won't be around. Retention will switch over to the next 45th copy of Bejeweled.
It's actually a very interesting model. The same games are re-created by new "startup" companies every few months. 1/100 hits and becomes a Top-10 item in the app store. The game gets huge traction by leveraging FB's massive user base, company puts together obscene numbers showing engagement, in-app purchases, growth projections (which end up diving after a few Q's) and then go out and raise Series-A rounds.
What I CAN'T figure out is - are VCs really this dumb to invest in companies that won't be around in 12-18 months? Maybe they're not, maybe it's the VC model that's flawed. Invest in 100 companies @ $1.5-3M per and 1 will go public or get acquired and we'll make our money back. But this is an entirely different conversation.
This is how most VC's and kids calling themselves "entrepreneurs" these days see the world.
If I have to hear one more idiot with an app or another 56th version of a similar service like Instagram say they're "changing the world" I might lose it. Ha!
Candy Crush may be a bad example... King has been around for 10 years, so not really a startup. They're somewhat similar to Rovio in having a late hit.
It depends what they do with the success that determines their future, I'm pretty sure they're aware that Candy Crush is a fad, just a matter of exploiting it while working on the next thing.
They had an original idea, a great product, they kept releasing new additions to the product. They built a large business around it. They branded the product, they created merchandise, they never scummed their employees and took their early equity.
Don't you think Angry Birds was rather "inspired" by Crush the Castle[1]?
They did well milking the idea for every penny, and I think they were a key driver of the casual gaming genre (along with Zynga and their Facebook gaming) but I think they were pretty lucky with a few key celebrity endorsements.
Zynga's remaining value was $1b in yearly revenue. Q2'13 they lost 45% of that dau in 12 months, which means revenues just halved.
Mattrick is now a Nasdaq CEO. Totally worth it to him.
We're looking at no more than four shrinking quarters after which Zynga will fold or transform through some transaction. Pincus gets to say it wasn't his fault.
Isn't it the goal of every startup praised here on HN? Provide no real value, aquire users as quick as possoble, sell out, take the money and let the buyer to shut down the project.
Cash runs out, especially with their overhead. Sure, the downsizing helped, but there's no reason they need that kind of staffing. VC's will push for huge hires in the beginning. But the company has been taking for well over a year. The IPO was a scam, Pincus raped the price and stole $200M. The SEC should investigate him 100%
They need a good product. They don't have one. They probably won't have one since their entire company revolves around copying former titles (like the Sim games). I wonder what happened with the EA assault on Zynga?
The Ville was obviously a graphical and mechanical rip-off of The Sims, with a thick helping of Zynga Sauce slathered on top.
Having worked on the original version of The Sims, and knowing a bunch of former Sims designers and developers who now or recently worked at Zynga, I thought that The Sims Social was itself, modulo the original Sims stuff at its core, an almost literal rip-off of the cliché "social game" mechanics that are the signature of Zynga's game, but that was EA's sweet and fitting revenge for Zynga ripping off theirs and everybody else's games. (But no, EA wasn't "standing up for the game industry", it was just a bully bullying back at another bully.)
So Zynga copied The Sims and added their own "stuff" on top, then they got mad when EA copied Zynga's own stuff back on top of The Sims to make it into a "social game". Tough shit, assholes! Really sucks when somebody does the same thing back to you that you did to them, doesn't it, huh? The judge must have had a big laugh at both their expenses.
I suppose it's a good thing that they settled out of court, so they didn't established any legal precedents that you can't copy generic game elements.
So if all The Sims Social was meant to do was to screw over Zynga the same way Zynga had been screwing over other companies, then it was a spectacular success, and a brilliant piece of performance art, and parroting all those clichéd design decisions was justified! But was that the best direction to take the Sims franchise in as a game...? Well that's a different question! ;)
The shitty thing is that all of Pincus's sins will be forgotten the next time he starts a company because in Silicon Valley a man's worth is measured by his bank account.
Sigh, I would agree with you except this is kind of the third time he's done this...
Support.com, massive lawsuit for "computer checkup ads"
Tribe.net, The community that owns the "island of lost toys". Basically a relatively successful social network that went belly up for a number of reasons
and
Zynga, the red-headed stepchild of the Facebook platform.
So, IMHO, no one will remember Zynga the next time Pincus has a startup, just like no one remembers tribe or support.com.
Ain't that the truth. Some believe in karma, maybe he doesn't.
This will change. Look at Kleiner - investment after investment = flop after flop. Cleantech. Ouya. What's next?
Institutional money, pension funds, high-net worth individuals, sovereign wealth funds, etc. will all start realizing and cracking down on these idiotic investments left and right. It's like the eyeballs craze of the 90s. Have a site? 100,000 eyeballs a month? Shit, you're a $500M company. You'll make money somehow in the future, we believe in you.
the funny ironic thing is that his scamming prowess is something that makes him a good investment for many VCS. once ahner asked me (because I had made some moral corporate standard statements) whether I would as avc invest in a hypothetical next startup by asshole Steve Jobs. not entirely sure if I could resist that one but I'd never invest in Pincus's next startup out go work for it.
I think that Zynga's major problem is a about changing markets: Zynga grew rich making clones of other games and cleverly using web-based-social-promotion via Facebook to advertise them cheaply. But now they face the same problem that Facebook itself faces - that more users are now mobile based than web-based - combined with the fact that much bigger companies are now not only licencing/cloning games but also combining them with their existing IP which has a much bigger draw for users because of the combined marketing clout behind it.
For example:
* Disney/Pixar now have two top free to play apps based on combining Temple Run with their existing IP. These games not only follow a proven winning formula, but they also piggy back on the movies marketing budgets to promote the games (to a much larger extent that Zynga could afford)
* Universal Pictures has cloned Temple Run Zynga style (but with much more original flair) to make their Despicable Me app game. Like Disney their massive film marketing budget drives the games success, and rather than users having to "warm up" to new characters, the lovable minions are already there for instant recognition/gratification.
* Rovio has made great strides making their original IP (Angry Birds) worthy of Disney level acclaim, but they've also heavily co-branded (via advertising and Angry Birds Star Wars) in order to increase profits.
Every startup needs to watch out for this one. Users are aquired in several different ways, 2 main ones are:
- Tricking users into your product or service through gimmicks, lies, or aggressive marketing.
- Earning users by solving their problem and selling them value.
Zynga did the former and users are getting sick of it. Other examples are infomercial products, they sell like crazy based on promises and gimmicks and fade away into oblivion in the mid and long term. Think back to all the things you've seen on TV (especially exercise products and makeup brands), how many of them are still around? Despite many of them being successful and collecting dust in millions of homes' basements, they fizzed out.
I don't like the model of paying for a digital object that doesn't do anything besides bypass a bit of code that makes the experience more laborious or time delayed.
I personally download these games and play the shit out of them, but never ever give them money. It becomes a different aspect of the game -- sure, I have plenty of money to give you, but I don't think I should give it for something to speed up the experience -- I mean, you designed the experience, so it becomes a personal challenge until the game becomes boring -- oh, and I never mention it to anyone else, as to remove the word of mouth part.
I happily pay for good games that don't use this mechanic and tell my friends about how rad they are. It's how I speak with my wallet.
It's almost as though form-over-content and superstimuli combined with an easy-cash mentality aren't compatible with long-term profitability! What is this world coming to!
Mark Pincus has a Stasi-like scheme which is how Zynga uncovers game ideas and other business secrets. It involves using the accounts of people under his influence, use of false identities and phishing. Offering a job in some company is another way he uses to have victims volunteer information or answer questions. Not even these tricks has saved Zynga after they lost the guaranteed traffic deal with Facebook.
Mark Pincus is unlikely to get caught, but as the CEO of a publicly traded company, supported by Kleiner and others, he was a criminal, like Richard Nixon but on a smaller scale.
I find it weird how this story/event/business is positioned. Basically Zynga is a collection of mostly similar games. All popular games follow the same life cycle. If a game is good, people play the game. The game becomes popular. Then people get bored of the game, and they stop playing. I feel sorry for people, especially those at Zynga, who didn't see this.
I wonder about the long term viability of these sorts of pay to win games; they seem awfully vulnerable to the whims of the platform owners, and they're easy to paint as more like tobacco than they are to toys or video games.
Personally, I'd like to see them all crushed, their offices burnt to the grown and sown with salt -- Zynga delinda est and all that.
Like a lot of people, this just makes me feel vindicated.
As someone who has actually bought Zynga games, I could post you the back-and-forth, back-and-forth, back-and-forth, email thread I had with their tech support over the most minor issue, but it wouldn't help anything. (Essentially there was a minor bug in a game between me and this other player but their only "solution" was to block the user for 3 days and then restart.)
All those promising companies they bought have been swallowed by the beast and now die in its belly.
Like Dextrose with their Aves engine.. that looked truly impressive then they sell out to Zynga and who knows what crapware their innovation is now powering.
Hopefully some of that sees the light of day again.
depending on the streaming quality, chromecast could help zynga port games to the TV and create new types of gaming experiences centered around the TV (where devices are controllers, and a laptop/desktop is the brain).
They're just basically in a holding pattern until they can do "real money gaming", is what I thought. It's not clear that they have any particular advantage in real money gaming over either new entrants or existing real money gaming/gambling companies, though, especially since there seems to have been a "brain drain" over the past 2 years.
They specifically said on the earnings call that they are no longer pursuing real money gaming in the United States. Part of the reason why the stock tanked so hard in after hours.
Fuck. I had options :( (part of my "buy long positions in evil companies, especially after bad news; people underestimate the profit potential of evil and overestimate meaningful public or government reaction" -- generally works well though.)
I've considered this strategy, but it seems to not be as reliable as one might expect. The obvious example is the BP oil spill. The stock lost half it's value, from about $60 a share to about $30 a share, in two weeks.
However, if you didn't time the buy-in just right, you would have bought at around $35 - $40 a share (if you bought either early or late), and today it trades at $43.
That's the difficulty with many analysis ideas - they work great in retrospect only, when you can see exactly when the low points are, and can believe "If I had bought on that day, I would have made a mint." But from day-to-day, determining "that day" is virtually impossible.
Yeah, I got into BP at 28x100, 30x200, 32x400 and got out at 45 (half each time it hit that) -- this was before I started playing with options instead. I intended to buy more on the way down. I was also planning to hold it indefinitely but needed the cash to buy other stuff (it's all in a Roth, so it's hard for me to put cash in.)
In general, though, it's not about "buying on news", it's "buying sinful industries in general, but particularly on bad news/dips" -- defense, oil/coal, alcohol, etc. The other model I've used which has been far more effectively (and less disgusting morally) is "buy products I know a lot about and really like, as long as the company itself doesn't have serious financial or leadership problems"; TSLA, MSA (they make the world's best body armor, which I loved in Iraq, Paraclete), various arms manufacturers, etc.
Chromecast doesn't stream from the device to the TV. It just receives a request from the device, then pulls the stream directly from the web. As far as I understand it, it's useless for games.
Streaming with AirPlay, on the other hand, is a totally different story, especially with controller support in iOS7. It fully supports the scenarios you're talking about.
precisely. chromecast is essentially a xbox killer and a platform for marrying the computing power of a desktop, the development model of the web, and the leanback experience of the TV (assuming the streaming works well).
I've been betting heavily on a turnaround, adding to my position in ZNGA each time it dipped below $3. Real money gambling I knew would be the savior and since they weren't burning much cash any more, they just had to wait for that to pass in the US.
Them canceling those plans - and Mattrick saying they are 'resetting' and expect volatility to continue, makes me lose my faith. I think I'm going to get out of the stock.
I don't know much about Mattrick so maybe he is a turnaround specialist and what he did at EA and Microsoft was great and he will save the company - but the business they are in is a loser. And they don't appear to be interested in a pivot.
Sad day. I now agree with the sentiment that Zynga is a dead company.
I've been betting heavily on a turnaround, adding to my position in ZNGA each time it dipped below $3. Real money gambling I knew would be the savior and since they weren't burning much cash any more, they just had to wait for that to pass in the US.
The current user trend is still nothing but down. With user acquisition costs likely not getting any smaller, they aren't that far away from crossing the threshold of not having enough users to migrate to a new game, to spark it. At that point, it won't matter if their games are original, or re-badged copies of other games. They'll be in the same situation as your average (or below average) game dev startup, except with 10x (or 100x if they don't do more layoffs) the expenses.
Mattrick's track record with XBox One really should not inspire any confidence. But maybe that was just an unfortunate set of circumstances outside his control...
Anyone who has played online poker on a rock-solid platform like PokerStars and then witnessed Zynga poker crash, mishandle network outages, skip players turns, auto-fold due to timeouts, etc. knows that they don't have a chance in hell to win over serious players with their tinker toy poker platform.
And when real money is involved EVERYONE becomes a serious player.
Sorry for your loss. At least you understand the dynamics of the company you've invested in and took some (big) bets. Loses happen, companies tank.
I would probably hold the stock. Someone might buy them out for their talent, or whatever is left of it. I'm sure you're deep in the red, might not be the best idea to cash out.
I actually haven't lost money. I still have a 57% overall profit (at a price of $3.03).
It does suck though. Similar to how it probably feels to have your startup be acqhired. It's not a total loss - but it's definitely not what you were aiming for.
This company has always been and always will be a pure scam. Period.