Monday, 8 October 2012

More Zynga News

What a way to start the week.

The end of last week brought some huge changes for the company I love to hate, and most of them weren't exactly stuff they'd have wanted to happen anyways. Needless to say, I couldn't be happier, but still, personal feelings aside, I think that all of this is noteworthy enough to also share with you. Just so that I don't drown this page in links you guys should know that all of these stories came from GamePolitics, one of the better sources (in my assessment, at least) for news of what's going on behind the scenes.

First, continuing a recent trend of people leaving companies, it was revealed on Friday that Paul and David Bettner left the company. The duo had been the brains behind Words with Friends, the game that, to put it bluntly, made the Internet its bitch for a little while. The duo also created the site omgpop, which was acquired by Zynga earlier this year.

This is yet another case of people leaving the company for uncertain futures. It seems as of late that Zynga in particular is hemorrhaging employees left and right. This one is just the latest of a number of higher ups and notable names leaving the company. Again, I don't really doubt that part of the reason is that Zynga has been on the decline lately, and the whole lawsuit circus that they've entered into with Electronic Arts probably hasn't helped matters much either.

Perhaps due in part to these circumstances, it also came to light on Friday that Baird Equity Research downgraded the company from an Outperform ranking to Neutral. While this might not seem like much it's important to note that the website shows that from the stock being at a high of fifteen dollars a share earlier this year it's now holding at a projected three dollars a share. That's a huge decline and never a good sign for any company.

The site pointed out some of the factors behind the decision, stating:

"Our new target is based on 15x 2013E EV/EBITDA which compares with a 7x multiple for its comp group. While we see limited downside from here, and mobile and social gaming continues to grow, the extreme lack of visibility point us to the sidelines. Risks include a significant dependence upon the Facebook, Android and iOS platforms, as well on the overall interest and engagement levels in the core "Ville" franchise of games."

In simple terms, they're worried about the potential staying power of the company, especially now that more and more eyes are turning towards the social gaming market. The idea that people are starting to grow tired of Zynga's offerings, combined with the sheer number of other games, apps, and other things to do on your computer/iOS devices means that they can't be confident in the company until something comes along to earn that confidence back.

Finally, in part because of the floundering stock prices, there has been speculation that now might be a time for interested parties to attempt to acquire the company. Facebook was thrown around as one such potential buyer, but the door remains open to many companies ... although probably not EA I'm guessing. If the company is purchased then it's hard to say what the future could hold for Zynga, I would assume that anyone interested would be hoping to cash in on social gaming, but with the recent decline there might be some growing hesitation to purchase the floundering creator; it's sort of a double-edged sword in that regard.

Regardless of what the future holds though, I can't say that I've seen anything from the company that would effectively change my stance on them and the "games" that they've produced. Perhaps if a somewhat legitimate company bought them we might see some improvements, or maybe not. At this point, I'm not even sure I would care.

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