Tomahawk, WI 9/17/2013 (BasicsMedia) –  Zynga Inc (NASDAQ:ZNGA) has made a very good name for itself as a top developer of social game services. Its social games are played over the Internet, as well as mobile platforms and social networking sites. It enjoys a very good reputation based on the fact that five of its games are listed as among the Top 10 on Facebook, as demonstrated by looking at DAUs. Not only that, but this is a company which enjoys visits from more than 63 million DAUs all over the world. Lately, there have been numerous reports to the effect that the company is in financial problems.

ZNGA is Popular But not Profitable

The number of people playing ZNGA mobile games is much higher than what you will get by putting all players engaged with the next best five gamers. This makes it quite difficult to understand how such a company could still manage to struggle financially when it is more popular, and its games loved by almost all social network game enthusiasts. Examples of the best games which are the products of ZNGA include Farmville, Draw Something and Zynga Poker. This is a company which recently reported a net loss to the tune of $16 million.

Reasons for Drop in ZNGA Revenue

ZNGA’s revenue has dropped tremendously by as much as 31%, and this isn’t good news for such a company. This is according to the financial results announced for Q2 of 2013. Recently, the company sacked almost 18% of all its staff members, and this could be due to its inability to sustain their remuneration. This is a clear indication that there are financial problems which are perhaps quite deep than what analysts estimate. The decision to hire Don Mattrick as the company’s new CEO has also been attributed to the financial difficulties it is currently facing.

ZNGA has attempted to address its huge financial problems through restructuring. However, this has not borne much fruit leading to the decision by the company to undertake the strategies which are listed above. However, I still blame Zynga’s inability to be innovative as the main reason why it finds itself in this very infamous position. Secondly, I blame the company’s inability to undertake effective product development strategies as the other reason as to why it finds itself in such financial difficulties at a time when it ought to be making a lot of money.

ZNGA Overtaken by New Companies

While Zynga has been more preoccupied with its reliance on the products it developed for the social networking sites years ago, new companies have come into the market and taken it by storm. ZNGA’s lack of innovation has only made it easier for its formerly very loyal customers to go elsewhere and try new products from companies such as King.com, Take-Two Interactive Software Inc, Activision Blizzard Inc and Electronic Arts Inc, to mention but a few. Zynga’s attempts to bring back its old gamers have thus far not been as fruitful as it hoped.

A lot of work still has to be done in order to ensure that ZYNG emerges from this dark period in its history to start making money once more for its investors. At the current rate, I don’t think the investors have reasons to celebrate their decision to invest in Zynga Inc stock.

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