In the months preceding its 2011 IPO, some analysts estimated the company to have a market cap of $15 billion to $20 billion. At the last minute, that was dropped to $7 billion. And the company’s shares quickly took a dive after trading commenced. Today, the company’s market cap sits at less than $3 billion.
As the company continues to see users abandon its games at an alarming rate, it has reversed course on its plan to pursue real-money casino games in the U.S., a combination that led to investors punishing the stock Friday.
As the gaming world struggles to comprehend the move by the one-time head of Microsoft’s Xbox division to the CEO’s office of the struggling social and mobile gaming giant, details are coming to light that could explain not only why Mattrick made the move, but that it was a long time coming.
There aren’t a lot of genuine surprises in the video game world these days, but Don Mattrick’s jump from Microsoft to Zynga Monday certainly qualifies as one.
Zynga has been struggling mightily since its debut as a public company, and many people felt Mark Pincus would never relinquish the CEO spot. But will Mattrick taking those reins be enough to turn the company around? And who’s taking over Xbox at Microsoft?
Now, he’s hoping to pull of a similar miracle at Zynga—but it’s a move that has left investors, Microsoft and the gaming world baffled.
All Things D reports Mattrick is close to taking the CEO position at struggling social game maker Zynga. An announcement may come as early as the end of the day.
Not too long ago, many people believed Facebook was the Next Big Thing in gaming. Developers debated it — sometimes ferociously — at conventions, while venture capitalists couldn’t fund the companies making those games fast enough.
But over the past few months, the air seems to have been let out of Facebook’s tires. Major publishers are withdrawing their support. Pop culture breakouts like Farmville are far and few between. Most damningly, players seem to have moved on to other diversions.
When Electronic Arts bought social games maker Playfish for $300 million—plus a $100 million buyout—in 2009, it sent shock waves throughout the videogame industry. Spurred by growing speculation about the value of then-private Zynga, some tech pros say it was the beginning of a bubble for developers who specialize in Facebook games.
On Monday, EA once again surprised the tech world – this time by announcing plans to axe several games on the social network, including The Sims Social, SimCity Social and Pet Society. When those titles shut down on June 14, Playfish may not have any active games—thus raising questions about its fate. (EA declined to discuss the future of Playfish, saying it was “not commenting on individual teams.”)
Wunderlich Securities’ Blake Harper got the ball rolling, noting that while Yahoo! has been reported to be sniffing around Yelp and OpenTable, Zynga (along with Tumblr and FourSquare) would be a good match as well.
Not too long ago, Zynga looked like a video game company that was dabbling in the gambling world. But more and more, it’s looking like the reverse might be true, with the type of gaming most closely associated with Las Vegas and Atlantic City moving to the forefront.
It’s no secret that Zynga’s stock has fallen far below its initial offering price. Lately, though, shares have seen two significant bumps–an 8 percent climb Monday and 10 percent climb on Feb 8. In both circumstances, it was the possible legalization of online gambling that drove the climbs.