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What Is Zynga Inc (NASDAQ:ZNGA) Game Plan To Face Industry Challenges?

As per the latest market data, the mobile gaming industry valued around $34 billion in FY2015. But despite witnessing remarkable growth, gaming firms like Zynga Inc (NASDAQ:ZNGA) are finding it tough to post stellar results.

The performance

In 2Q2016, Zynga’s revenues declined 9% YoY to $181.74 million compared to the market’s estimate of $169.5 million. Bookings came flat at $175 million and posted a drop of 4% sequentially. Net loss stood at $0.02 against the market’s estimate of loss of $0.03 a share. In the reported quarter, online game revenue decline 1% over the quarter while it declined 16% YoY to $136 million. The decline extended to advertising and other revenues which came at $46 million in 2Q2016.

Zynga continues to focus on a few major games. Its games Zynga Poker, FarmVille 2, Wizard of Oz Slots, Empires & Allies and Hit It Rich! Slots accounted for 19%, 12%, 15%, 10% and 11% of online game revenue.

The estimates

For the ongoing quarter, Zynga estimated revenues to come in a range of $170 million to $180 million with estimate for net loss around $29 million to $33 million. Bookings are projected to come in between $180 million and $190 million.

Zynga’s user metrics recorded no indications of recovery. In fact, average daily user sessions declined to 18 million in 2Q2016 from 21 million posted in 2Q2015. Average mobile daily customers dropped 15 million from 17 million a year earlier.

Game plan

Zynga continues to enhance its gaming offerings for users. For the Words with Friends, it reported a variant named ‘Words with Friends EDU’ that was promoted as an ‘educational game.’ It was introduced at the beginning of new school. The game has been advanced with the objective of making it more entertaining and also useful for students to improve their language skills. It addresses students’ needs with progressive vocabulary and for the students who have English as second language. New variant boasts many features like avatars for students, badges, covers a lesson plan for teachers, and an interactive dashboard for tracking purpose.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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