A dismal summer for the formerly buzzing social games vendor Zynga looks likely to drag on into fall and beyond. A depressed share price, wretched quarterly earnings, departing staff, a troubled partnership with Facebook, and a few lawsuits mean trouble down on the farm.
You remember FarmVille, of course? "The pastures are always greener on our side!" FarmVille, with hundreds of millions of devoted users, helped power Zynga to a December 2011 IPO and cemented Facebook's position as a gaming site as well as a social platform. At its most popular, FarmVille was played by over 30 million users in one day.
Zynga's IPO floundered, however, as the company failed to convince the market of the profitability and even long-term viability of its games portfolio. Indeed, TheSimsSocial, from a competing vendor, EA Games, had already overtaken FarmVille on Playbook when the public offering was made.
Stock in the company has followed a downward path ever since, going into a tailspin after the disappointing quarterly earnings report issued last month.
Yesterday, COO John Schappert resigned, amidst reports of plummeting morale, and with a lawsuit brought by EA Games drawing connections between Schappert's hiring (he was a former EA executive) and alleged copying of TheSimsSocial by Zynga.
Some of Zynga's problems are surely not of the enterprise's own making. Others arguably are. Facebook has let Zynga -- and itself -- down badly by its stark lack of progress in monetizing the mobile market. As Zynga's user base migrated to mobile platforms, revenues for both Zynga and Facebook fell.
Facebook has acknowledged its problems with mobile, and moved this week to remedy them, announcing a new ad unit for mobile apps developers. A mobile monetization solution cannot come soon enough for Zynga, or indeed for Facebook.
At the same time, Zynga looks culpable for being involved in outfacing social media products while failing internally as a social business. Complaints from employees suggest that Zynga's metrics-driven environment can make life grim.
Discord has evidently been growing since before the IPO and is threatening to develop into a rush for the exits, especially as stock-compensated employees have watched the worth of their holdings drop by some 70 percent this year. Sources say Zynga is trying to bandage this wound by making further company-wide stock grants.
Lessons to be learned? It's easy to say, "Have a unique product, which isn't easily overtaken in the market by competitors." It's also easy to wish for enterprise partners who don't have their own, increasingly serious, problems. At the same time, enterprises should certainly reflect on the consequences of failing on inward-facing social benchmarks.
Our fast-paced, ever-more-agile employment environment encourages the breaking down of boundaries between life and work, home and office, connected time and downtime. This places social responsibilities on employers and staff alike. Zynga is finding out that if employees don't like their lives, they can change them.
— Kim Davis , Community Editor, Internet Evolution