Game
developer Zynga Inc(NASDAQ:ZNGA) will have to move to mobile gaming and surpass
its long-time partner Facebook Inc(NASDAQ:FB) if it has to ensure its continual
survival.
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Analysis
The
Farmville game creator, which is now dependent on social networking site for a
significant chunk of its revenues, has to look for alternative revenue streams
as it faces dwindling interest from Facebook users.
In
the June quarter Zynga's earnings were hit as Facebook's introduction of the
`Timeline' feature and its changed search algorithm made it harder for users to
find existing games - mostly made by Zynga.
There
has been criticism that the new format on Facebook diverts traffic to newer
games and users are unable to play their old favourites with the same ease that
they used to before.
Realising
the gravity of the situation and also the fact that it can no longer pin its
fortunes on Facebook - which itself is floundering with slowing revenue growth
- Zynga is now looking at developing games for mobile devices and reducing
its dependence on the social network.
With
more subscribers taking to mobile devices for work and entertainment, it makes
sense for the company to also shift its attention there. In fact its ally
Facebook has also realised the importance of the mobile space and is trying to
find ways to monetise its mobile user-base and get more revenues from there.
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Zynga
has already made inroads into the mobile space by selling games, specifically
meant for the mobile community and that can be played on a standalone basis.
Incidentally,
in the mobile space, Facebook and Zynga might well find themselves pitted
against each other as they fight for supremacy on the smaller screen-space.
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