Zynga revenues still growing but users declining as competitors close the gap. Can CastleVille win some new fans?

Zynga released its latest quarterly earnings number in an updated prospectus. Dean Takahashi at VentureBeat has a good overview of the numbers:

Zynga reported net income of $12.5 million in the third quarter ended Sept. 30, down 54 percent from $27 million a year ago, according to anupdated S1 filing with the Securities and Exchange Commission. The performance isn’t stellar, but it’s not so bad as to suggest Zynga’s planned initial public offering is in trouble.

Revenue was $307 million in the quarter, up 80 percent from $170.6 million a year ago. In other words, Zynga is working harder for the profits it gets by generating a lot more revenue compared to the past.

In the second quarter, Zynga reported only $1.4 million in profits on $280 million in revenue, so the third quarter report is an improvement on a quarter-to-quarter basis.”

What’s interesting are the user metrics. From the filing:

“According to AppData, as of September 30, 2011, we had the largest player audience on Facebook, with more MAUs on Facebook than the next eight social game developers combined.”

In the previous filing, Zynga had as many users as the next 15 developers combined as of June 30.

Also:

“Our players are also more engaged, with our games being played by more than 58 million average daily active users, or DAUs, worldwide as of September 30, 2011.”

That’s down from 60 million at the end of June. And the quarter included the release of two new games: Empires & Allies and Adventure World. Also, monthly average users fell from 232 million to 230 million in the quarter.

Finally:

“According to AppData, as of September 30, 2011, our games were played by more DAUs than the next 14 social game developers combined.”

That number is down from 30 at the end of June.

So, as Takahashi notes:

“Zynga is working harder for the profits it gets by generating a lot more revenue compared to the past.”

The good news, as Zynga prepare for an IPO in the next few weeks, is that it’s coaxing more revenue out of fewer players. And Zynga has a big pipeline of games coming. That includes CastleVille, which will launch in the next couple of weeks.

The CastleVille release is the latest in Zynga’s “Ville” franchise that includes FarmVille and CityVille.

“This is really built on the shoulders of the games that came before it,” said Bill Jackson, the Zynga creative director who led a team based in Dallas that built the game.  “It’s built on the shoulders of giants.”

Jackson was giving me a preview of the games a few days ago. And the quality is indeed impressive.

CastleVille is set in Medieval times and has many elements that will be familiar to Zynga players. In this case, the goal is to build the castle of your dreams by engaging in a series of quests. A preview of the game demonstrated how Zynga continues to push the edge in terms of graphics as well as music, which includes the use of a full symphony to create the soundtrack.

Where the game pushes into new territory is in its expanded use of narrative. There is a story at the heart of it that players can choose how they follow, rather than having quests or goals dictated to them as in previous games.

At its heart, CastleVille remains a social game, but it also shows how Zynga is moving toward creating massively multiplayer experiences. The question now is whether the rising production values and the evolving game experience will draw new players as well as longtime Zynga fans.


 

Tags: , , , ,

 

Share this Post



 
 
 
  • linda

    too bad they dropped scramble.. they abandoned a great game and left a lot of players very unhappy and angry.

  • Rebecca

    Other games are gaining on Zynga because of Zynga itself. It is increasingly difficult to purchase anything with coins. You must purchase with farm cash which is paid for with real cash. While people complain about this, the majority of people I know or have heard of left farmville because it has become a chore. It is pretty much a full time job. There are so many quests that it becomes work to finish them. I have heard it described as a “burden” and “a weight lifted from my shoulders.” To make matters worse there are constant technical issues — loading issues, items won’t post, error messages, items aren’t credited, and more. Gamers get very frustrated.

    I left Cafe World about a year ago. I tried it again several months ago encountering the same technical issues that made me quit in the first place. Pioneer Trail has become worse. Too many quests and technical issues make it miserable to play. I stopped playing for months, returned, quit again, and have no intention of returning. Others have complained. I wasn’t overwhelmed with Mafia Wars, and I found the violence in Mafia Wars II intolerable — definitely not my cup of tea. I tried the adventure game but found it unimpressive. I quit almost as soon as I started. I’m hoping CastleVille will be more exciting.

    I invested a great deal of time and energy in Cafe World and Pioneer Trail, but I have certainly worked far more with Farmville. I have considered and discussed leaving. What is keeping me there? People. I have met a lot of people through the game. I’ve become familiar with them and parts of their lives, but our only real connection is Farmville. I would miss them if I left the game.

    At this point Zynga is still doing well, but people are leaving the games and eventually it will show up on the balance sheet. Zynga needs to listen to their consumers and solve some of the issues instead of adding new quests. Someone is always ready and willing to steal your place in the spotlight. It seems to me that Zynga is handing it to them.

  • With Zynga’s expansive growth, they are bound to run into data hosting and server issues to keep the games running smoothly. To ensure their revenue’s keep growing, they should really consider professionally-run data center hosting and managed services.

    CoreLink Data Centers is a leading data center hosting and managed services provider of critical infrastructure services delivered on a “state of the art,” robust and environmentally friendly technology platform.

  • Alexandra

    Guess what, zynga is just collecting a huge load of money from people to pay their personnel with and give the people at zynga a rich and prosper life on the sake of our wallets!

    If zynga starts to fail irrecoverably they will sell their dying company or will disappear.

    This is just a we farm dumb peoples wallets project.

    They dont care about technical issues because it would decrease their profit.

 
 
css.php