Zygna Struggles for Game Changer, Going Mobile

It's not been all fun and games for social entertainment developer Zynga ZNGA. The struggling online game maker is reassessing its business model. CEO Mark Pincus, told the Wall Street Journal. “"I think that there's an opportunity on mobile for there to be a connector of these experiences”. Zygna's second quarter results revealed a loss in revenue growth from its core social game Farmville. The number of Facebook users playing games on its site has fallen by 19 percent according to the Wall Street Journal report. To add to Zygna's troubles, Electronic Arts EA has filed suit Friday for copying key elements of its “The Sims Social” game. Zygna is accused of mimicking EA's hit, with its “The Ville”. The social gamers' need to enter the mobile game market is paramount. The stock price has steadily been getting hammered on the NASDAQ. Since February the stock has gone from $14.69 to $2.70 down almost 80 percent. Chief Mobile Officer, David Ko, has yet to figure out how to monetize the mobile market. Cowen analyst Doug Creutz warned in a research report back in June that all of the company's major titles were declining significantly. Cruetz further pointed out as reported by Forbes. “We believe that consumer preferences may be switching decisively to mobile games given that game quality is similar, if not better, and mobile games have the added advantage of being playable at any time, anywhere.” Everyone is struggling to make money from the mobile phone market. Facebook shares in particular have been punished. Facebook is trying to find ways to boost their advertising revenue from their mobile presence. The two companies are closely tied together. Zygna is Facebook's largest source of revenue. The small screen is challenging to game makers. Not only does the screen not provide adequate room for some games but leaves little room for advertising. The Wall Street Journal pointed out that another challenge for Zygna is the “casual player” who tends to spend less time and money than the dedicated online players. CEO Pincus, in an interview with GameBeat, acknowledged, that the social gaming market has moved especially quickly in the last 18 months, noting that Zynga has been "investing and betting on mobile heavily." He also indicated that Zygna builds markets through building products and does not approach these tenets through marketing. Unfortunately for shareholders, marketing is an essential part of growing revenues. Since Zygna's recent acquisition of OMGPop for $180 million it has been losing players. The company and the social mobile gaming space have become extremely challenging to monetize. Even large gaming competitors like Electronic Arts and Activion Blizzard ACVI are struggling in the mobile arena. In early morning trading Zygna is a penny to $2.71 per share.