BUSINESS

Zynga admits it botched Poker revamp and NFL Showdown launch

TAGs: don mattrick, social gaming, Zynga, Zynga poker

zynga-revenue-fallsSocial gaming outfit Zynga saw its shares tumble nearly 16% on Friday – its biggest one-day drop in two-and-a-half-years – after the company turned in underwhelming Q4 and FY 2014 numbers.

Bookings, the sale of virtual good and credits, rose 4% to $182.4m in Q4, well below market expectations of $201m. Advertising revenue rose 139% to $58m but the company still booked a $45m net loss for the quarter.

For the year as a whole, revenue fell 21% to $690m. Game revenue fell 28% from 2013 while ad revenue grew 34% to $153m. Net loss for the year came to $226m, of which $129m was stock-based expense, $24m in restructuring expenses and a $7m income tax benefit.

Looking for a bright side, Zynga pointed out that average daily bookings per daily average user was up 31% in Q4. Trouble is, the number of daily average users fell 2m to 25m, monthly active users fell by 4m to 112m and monthly unique users fell 9m to 71m.

Zynga’s efforts to transition to a mobile-focused company appear to be paying off, as Q4 mobile bookings rose 14% sequentially and 120% year-on-year. Mobile now represents 60% of total bookings and the company has set a 2015 target of 75% mobile bookings.

Zynga’s core franchises – Farmville, Zynga Casino and Words With Friends – reported 35% year-on-year bookings growth. Zynga Casino saw Q4 bookings rise 8% from Q3 thanks to a 34% gain in the Slots category, which was driven by a 27% gain in Hit it Rich! Slots and the launch of Wizard of Oz slots titles in mid-November. But Zynga Poker saw Q4 bookings fall 7% from Q3.

HASTE MAKES WASTE FOR POKER, SPORTS PRODUCTS
On the call with analysts, Zynga COO Clive Downie said the company had “a challenging time implementing our new Poker product and we learned the tough lesson that we needed adequate testing across consumer segments, geographies and devices.”

Regardless, Zynga Poker still maintains a 25% share of the social poker market and the company believes it can “restore the product’s momentum through several key initiatives.” These include expanding Zynga Poker Elite into its “highest priority international markets,” namely the UK, Australia, Canada, France and Germany.

Zynga’s foray into the sports world was also not as auspicious a debut as the company hoped. A desire to launch NFL Showdown in time for the season kickoff led the company to rush a product that was “incomplete relative to the market opportunity.” Downie said the company continues to tinker with the product in the offseason and hopes to have a better time in September 2015.

Zynga also announced it was closing its development studio in China. The studio has churned out new titles like Farm Village, but none of them managed to catch fire with players. Zynga says the closure will save the company $7m per year.

These and other missteps led some analysts to call for the head of Zynga CEO Don Mattrick. BTIG analyst Richard Greenfield issued a note saying Mattrick “appears to be all over the place,” similar criticisms that were leveled at Zynga founder Mark Pincus, who handed Mattrick the reins in July 2013.

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