Zynga Inc fell short of financial forecasts for the third-quarter, reporting reduced earnings in part because of problems with its long-running Zynga Poker product.
The San Francisco-based software developer hit $232.2 million in revenues between July and September this year. And while that’s up four percent over the same period last year, it missed analyst expectations, which had been forecast at $250 million for Q3.
Net income was down 44 percent to $10.2 million. Adjusted earnings also fell by 15 percent, but bookings – the in-game sale of goods – were up 17 percent.
The financial fluctuations come at time of transition for the company, as it faces new challenges from Facebook and tries to figure out how to reinvigorate its once-dominant poker franchise.
Poker Problems
The play-money, social gaming franchise launched on Facebook in 2007.
By 2011, ESPN declared Zynga Poker the biggest poker site in the world, with more than 38 million users. By 2014, an estimated 350 million people – or 4.6 percent of the world’s population – had played the game at some point.
The company even flirted with offering real-money poker, but other than some brief experimenting in the UK, that never materialized.
Their casual model was so successful that it prompted real-money operators like PokerStars and 888 to change their approach in a bid to bring in more casual players.
But the company is now struggling to adapt to a new environment that is much less Facebook friendly.
The social media monolith changed the rules around in-game purchases earlier this year, cutting into Zynga’s revenues. Making matters worse, according to CEO Frank Gibeau, were new bugs that led to some users not being able to log in through Facebook.
It all added up to a three percent drop in year-over-year mobile revenues.
The financial figures released drove company stock down by a little less than one percent by Wednesday’s closing.
Leveraging Fantasy Franchises
Zynga is now turning to Harry Potter and Game of Thrones in a bid to boost its bottom line.
The corporation confirmed that it had signed new licensing agreements with Warner Brothers Entertainment which will see it develop and release a new Harry Potter-themed mobile game late next year.
It will also build two new games around HBO’s Game of Thrones, the first of which will be a slot-machine game and will land on mobile devices in the second half of 2019.
Zynga also has a Star Wars game in the works, which is expected to be ready sometime in 2020.
As far as Zynga Poker, the company is expecting “some softness” to persist in its poker product heading into the final quarter of 2018.
