Zynga’s Q2 2013 earnings report shows losses in revenue, players, and an abandonment of real-money gaming

Zynga

Zynga today reported its Q2 2013 earnings, with the social and mobile game developer announcing losses of revenue, a decreasing player base, and plans to abandon its push for real-money gaming in the United States.

Zynga’s monthly and daily active users decreased year-over-year. Q2 of 2012 saw 306 million monthly active users and 72 million daily active users. Those figures had decreased to 187 million monthly active users and 39 million daily active players in Q2 2013, a decrease of 39 percent and 45 percent, respectively.

Revenues of $231 million for Q2 2013 are 31 percent lower than the $332 million reported in the same quarter last year, while average daily spending per player increased from $0.046 in Q2 2012 to $0.053 in the second quarter of 2013. This increasing figure could be due to the decreasing size of the overall player base, causing the remaining paying players to make up more of the overall total and therefore increase the average. However, specifics on the increase weren’t detailed.

Perhaps most interesting is Zynga’s apparent abandonment of its push into real money gambling in the US. The company previously launched its first two web-based real money gaming portals in the UK in April: Zynga Plus Poker (our review) and Zynga Plus Casino (our review). The push into real-money gaming in the US had continued even until last June, when Zynga’s annual shareholders meeting reportedly focused heavily on real-money gaming as an avenue for new growth into the future.

According to the company’s latest financial results, however, Zynga is instead looking to get back to basics and focus on free-to-play social games. The statement reads: “While [Zynga] continues to evaluate its real money gaming products in the United Kingdom test, Zynga is making the focused choice not to pursue a license for real money gaming in the United States.  Zynga will continue to evaluate all of its priorities against the growing market opportunity in free, social gaming, including social casino offerings.”

Zynga’s Q2 2013 earnings call presents a rough situation for the company, but it’s one new CEO Don Mattrick believes can be overcome.

“It’s clear that the market opportunity around us is growing at an incredible clip. It’s also clear that today we are missing out on the platform growth that Apple, Google and Facebook are seeing. In short, we can do better,” said Mattrick. “Getting a business back on track isn’t easy and isn’t quick. We have a lot of hard work in front of us but I believe we can succeed as a team and Zynga can do this.”

Mattrick continued to say that his focus will now be on “conducting top to bottom business reviews” and improving Zynga’s overall product quality.

“The next few years will be a time of phenomenal growth in our space. This is a relatively new market that has proven that a hit franchise can generate more than $1 billion dollars in bookings.  From box office to music to console to TV – few things in the history of entertainment have grown as quickly while creating such incredible value,” Mattrick added. “As our market grows, the hits are only going to get bigger.  Zynga has incredible assets to take advantage of that growth and I believe its biggest opportunities are ahead. There are good winds at our back – my job is to get our sails up and Zynga pointed in the right direction.”

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