Zynga stock plummets – Video Games Update
Zynga, the company behind popular Facebook games like Farmville, saw its share price drop yesterday and the company blames Facebook for the sudden drop.
Zynga is arguably the largest browser based game development company and might be considered the cause of the sudden shifts in consumer tastes from core to casual gaming. Farmville, released in 2009, is a simulation role playing game (RPG) and is one of
the most popular games on Facebook at the moment. The game was developed with Adobe Flash and is available for free on Facebook. An iOS version was also released in 2010 for the iPhone and the iPad.
Although the game is really popular, the majority of the gaming industry seems to be against it as it was named as one of the worst inventions of 2010 by Time Magazine. Zynga has credited the sudden share price drop to ‘a more challenging environment on
the Facebook platform’ and analysts believe that the real reason behind it is the rise of Smart Phones. Zynga is solely dependent on Facebook on a PC browser for its games but recently Facebook has gone mobile and the majority of Zynga games are not compatible
with most of the mobile browsers.
Zynga has previously tried to enter the Mobile gaming market but that is dominated by Apple and Google and the social gaming company has not managed to establish itself in that area. Analysts believe that the success of Zynga was due to a boom in the social
gaming market but now that bubble has burst and Zynga is the first of many companies that will suffer because of it. Core gamers are pretty pleased with this news as they despise Zynga and the social gaming that it represents.
Analysts believe that this is only the start of Zynga’s financial troubles as the sudden drop in the stock price by a whopping 41 percent means that the earnings per share on the stocks have also taken a huge hit. This is likely to scare the investors away
and many would be thinking of disposing of their shares before the price falls even further thus creating a vicious cycle which will ultimately lead to the company’s demise.
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