Joe Spiegel at East Coast hedge fund Dalek Capital Management has been a go-to source of mine for all things Zynga. Though he’s been relatively bearish, given that most of Zynga’s users don’t buy virtual goods and therefore pay the company nothing, he’s given CEO Mark Pincus (above) and his minions props for their cutting-edge ability to mine data about users and offer carefully targeted ads.
Here are Joe’s thoughts on Thursday’s surprise SEC filing that re-sets the ground rules for what’s been an extraordinarily close working relationship between the social gaming pioneer and Facebook. While I didn’t get them in time for the story I filed earlier this evening, I thought them worth sharing:
“It’s not good. Zynga’s relationship with FB was a big barrier to entry [for other social gaming developers]. Now they are just one of many, and have to swim – or more likely, keep sinking – on their own.
“It does give them some freedom for their own Zynga.com stuff, so for that segment of the business I think their margins will improve. But can that overcome the further declines I expect in their core, FB-based segment?”
Joe also had some thoughts on what Facebook’s next step might be, especially since the company’s made clear it has no desire (at this point anyway) to develop its own games, as the new agreement allows them to:
“If I were FB, I would be encouraging indie game designers to write innovative games using FB payment and FB adserving. Kind of a casual Xbox Live Arcade. To me, that is the winning play for them.”