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.
Sources say Zynga is trying to bandage this wound by making further company-wide stock grants.
@Kim, thanks for the post. No doubt this is proactive move Zynga to prevent mass exodus but I am not sure if this move will help the company to retain its employees. Zynga is known to develop lot of casual games and the product cycle for these casual games is fast, if Zynga does not follow up with another popular game then it definitely will suffer in growth or even experience negative growth.
I did a piece about Zynga ffor a client some time ago, saying that it made an awful product that would fail, and shouldn't be invested in.
Which means I can't say too much for another 114 days. But some general points:
1. The usability of Zynga games is horrendous. Every game has mantenance tasks (which youy need to do at intervals). Let's call those tasks "X", the minimum number of clicks you need to accomplish them "Y" and the actual number "Z".
If "X" is "Harvest a crop", they "Y could be 1 (click a button saying "Harvest all crops"). Z would be number of plots divided by whatever tool you use.
On the average, a free user (who never bought anything) had to click 20 times for a maintenance task. Even buying tools didnt take the number below 10. There were helps you could get that were randomly awarded, but you still needed 5-10 clicks (open storage, scroll the menus one click at a time, select and then confirm).
It was 10-20 minutes every trip. And until you did that, you couldn't do the projects that would give you new powers or tools.
2. The pop-ups never stopped. Do you want to buy this? Do you want to try that? Yopu could be doing this. ANother player needs your help.
It was like visiting a porn site in the 1990's The number of clicks required to clear them was enormours.
3. The volume of collectibles. There are usually 10-15 optionak projects going on at any one time. People wanted to collect them, but there were so many -- and they all required so many clicks-- that they couldn't get everything done.
4. The game crawled. They were all ungodly slow, with no way to turn off options to improve speed.
We estimated that a substantial percentage of the time spent in a game session was wasted, either waiting for people, clearing the screen or using 20 clicks to do something that could be done with one.
Every user I interveiwed expressed frustration with this. It was easy to predict that players would get furious at some point and quit. And trying to play on their phones was going to make it even harder.
Plus, 70% of their games all look and play alike, so it wasn't like you could avoid the issues by switching games.
People are calling these games fads... but if they had constantly changed and improved the experience, users didn't have to burn out. One person said that the Santa Monica Freeway could be less frustrating. The moral is "Don't piss off your customer if you want to stay around."
It is said that half the battle is being aware, "you have a problem." It may be too late for Zynga, but they do recognize as does Facebook, that unless they find a way to monetize the mobile app market, its days may be numbered.
Analytics are a tool, but you have to know how to use the tool correctly to get the most from it. Hammers work best when you hit stuff with the metal end, and hold onto the wooden part. Metrics are used to measure how well the tool is being applied, but again, you had best have the right metric, or things are going to get grim in a large hurry. Perhaps the correct metric will tell them who the proper person is to scapegoat for this particular problem....
While analytics are a powerful business tool, I think there's a lesson here in that numbers shouldn't make the decisions.
I seem to recall that Zynga had some pretty strict numbers to adhere to and that employees weren't always treated right.
Have to wonder if they were letting the numbers lead them. Or it could just be that they weren't able to maintain their edge. EA doesn't exactly have great employment practices from what I heard.
Still, with all those Farmville updates I had to block, I can't say I'd miss them.
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