Zynga: The Canary in the Social Media Mine?
An interesting story today over on CNN, where Zynga has announced 5% workforce cutbacks. If the name of the company doesn’t mean anything to you, perhaps this will: They are the maker of all of those Ville games on Facebook, such as Farmville, as well as other social media games such as Mafia Wars.
The staff cutbacks come as they choose to shut down 13 games and to trim in other places. It also comes as Facebook’s own financial reports have shown that in the last year, their income from Zynga has dropped 20%, which suggests that Zynga’s revenue has been dropping in that same sort of range. What is key here is that Zynga is the biggest and most prolific player in the social media gaming sphere, and their trials and tribulations are perhaps an indication of things to come.
This also matches up with Facebook admitting that they have a problem monetizing mobile traffic, and now Google admitting the same: mobile users are not as valuable at this point. The same shift to mobile, bypassing much of Facebook’s interface, may be hurting Zynga by taking the games out of people’s view. Changes made over the last few years by Facebook certainly have limited the exposure that most people have to other people’s gaming activity, making them somewhat less social.
It is also perhaps an indication that the whole social media thing is on the wane. While Facebook claims to have topped 100 million users, even conservative estimates suggest that up to a quarter of all of their profiles are either fakes, duplicates, or pseudonyms for existing users. Moreover, as users move to mobile and use apps to access the service, it appears that their activities are more directly social updating, and less about other social aspects of the service such as games.
When Zynga releases their results, it’s like to be a good indication that the vast majority of the easily mined gold in the social media world has already been scooped and spent.