Analyst: Declining Zynga User Activity 'Extremely Troubling'

October 27, 2011 -

Cowen and Company analyst Doug Creutz says that the continued user decline in various Zynga games on Facebook is "extremely troubling."

"Three of the five recent launches ('Empires & Allies', 'Pioneer Trail', and 'Adventure World') have suffered 40%+ DAU drops off their post-launch peaks, while 'Mafia Wars 2', launched two weeks ago, is already showing signs of having peaked. We think the lack of user growth at Zynga - which is really a two-year old problem - could cause issues ahead of a potential IPO in November, particularly given an expected rich valuation," he said.

Of course Facebook recently changed the way it counts Daily and Monthly Active users, so that is changing the number of users dramatically - at least in the last couple of weeks. Still, even new titles aren't helping to stop the player drop off on Zynga's games. As Creutz points out, newer games are "largely cannibalizing users from old titles, and failing to attract new users to Zynga’s portfolio."

Creutz goes into detail on why user drop-off may prove to be a serious problem for Zynga - particularly because the company is moving towards going public soon:

"At least as disturbing has been the degree to which new launches have begun rolling over almost immediately after the initial launch. Three of the five games (Empires & Allies, Pioneer Trail, and Adventure World) are already down more than 40% from peak DAU levels. Mafia Wars 2 hit a DAU peak 8 days after launch and has gone sideways for the last week; while it is very early in the game’s lifecycle, we view this as a bad sign, particularly given that Empires & Allies, Pioneer Trail, and Adventure World hit peak levels between 5 and 18 days after the initial launch. Only Words With Friends has enjoyed sustained DAU growth (and we note that this was a Facebook port of a popular mobile game that Zynga acquired, i.e. not developed internally at Zynga). In sum, we view the user trends at Zynga as extremely troubling given the apparent lack of organic growth, particularly in front of an IPO that continues to be talked about at rich valuations in the $10B range."

Source: IndustryGamers


Comments

Re: Analyst: Declining Zynga User Activity 'Extremely Troubling'

I've been told that Facebook Gaming is mainly an American thing?

Re: Analyst: Declining Zynga User Activity 'Extremely Troubling'

This is where investors take missteps. They look at a company like Zygna with out understanding deeply the industry they are in and the product they sell. Zygna games have largely been ripped off, simple games that keep people hooked with skinner box tricks and nothing else. They are not the kinds of games that keep people coming back for more.

Online, mobile, and free to play games are seeing a huge explosion with a lot of developers and publishers putting out games of MUCH higher quality that what Zygna currently offers. Unless Zygna can hire some talented developers they are going to be a foot note in gaming history.

Re: Analyst: Declining Zynga User Activity 'Extremely Troubling'

"Troubling"?  It's fantastic news for fans of real games.

Re: Analyst: Declining Zynga User Activity 'Extremely Troubling'

The only group of people which it would be troubling for would be those that didn't see the Zynga style "game" bubble popping anytime soon.  If anything, I'm surprised that it didn't pop sooner due to the semi recession.

Though, the consoles and PCs did see one released recently called Skylanders: Spyro's Adventures.  You'll need at least 40 bucks on top of the 70 bucks for 2 more levels, plus any other extra figures (8 a pop) to cover any element holes that are in the 20 buck 3 figure + Level pack.  And from what I've heard, it gets pretty arm twisty in letting you know that you need moar figures just like it gets pretty arm twisty in some Ville games (Frontierville I've seen it happen in) saying you need moar friends  for things

Forgot your password?
Username :
Password :

Shout box

You're not permitted to post shouts.
james_fudgeI'll be watching the Facebook page09/01/2015 - 10:14am
james_fudgethe site maybe up right now, but we're not updating until we're at the new location.09/01/2015 - 10:13am
james_fudgehttps://www.facebook.com/gamepolitics09/01/2015 - 10:12am
Mattsworknamehttps://www.youtube.com/watch?v=T-Vx4_prmvo09/01/2015 - 3:18am
MattsworknameTotal bisquit talkes about why teh Deus X pre order systems is garbage.09/01/2015 - 3:18am
MechaTama31Infophile: Kind of like how you're criticizing these theoretical reactions before you've even read any? ;)09/01/2015 - 12:44am
PHX CorpI'll probaly Start the stream around 8PM Eastern08/31/2015 - 10:09pm
PHX CorpOk, see you guys Tomorrow on the GP Facebook Page, I'll be steaming either the first 2 megaman games(Through Megaman Legacy Collection) or Rare Replay as the first game on My twitch.tv page tomorrow While we wait for GP to Come back up later this week08/31/2015 - 10:01pm
james_fudgeAlso check out our Facebook page and chat there! https://www.facebook.com/gamepolitics08/31/2015 - 9:53pm
james_fudgeSee you all on the other side! Find me on Twitter :)08/31/2015 - 9:51pm
james_fudgeAllright, i'll mention this on the GP facebook page08/31/2015 - 9:49pm
PHX Corpand now it's ready to go for everyone08/31/2015 - 9:35pm
PHX Corpok, done http://www.twitch.tv/trustygemtwitch I have to put on one more finishing touch and it is ready to go08/31/2015 - 9:19pm
Andrew EisenFeel free to leave us suggestions on Facebook or Twitter too. We're going to be busy but we'll try our best to keep an eye on 'em.08/31/2015 - 8:59pm
Andrew EisenIt's an interesting idea though. If we do anything, we probably won't know until after the site goes offline so keep an eye on GP social media for announcements.08/31/2015 - 8:59pm
Andrew EisenYeah, we could use my Twitch chat box too. There's always IRC but we don't currently have a GamePolitics channel.08/31/2015 - 8:57pm
Goth_SkunkThough I think the limit is 9 at a time in the hangout, so anyone who can't get in would be stuck out in the 'on air' portion.08/31/2015 - 8:57pm
Andrew EisenFor the show, I'd like the chat open to anyone who wants to watch.08/31/2015 - 8:55pm
PHX CorpI could Set Up a Temporary chatroom on My twitch.TV page while GP is busy updating the site(since I'll be Fighting Megaman Legacy Collection on Xbox one)08/31/2015 - 8:54pm
Goth_SkunkI don't see a problem with inviting viewers. It's not like I'm advocating this to be an open forum, just something specific to GP members.08/31/2015 - 8:53pm

Be Heard - Contact Your Politician