It’s been a difficult year for free-to-play game developer Zynga. Once one of the most well-known companies on the web, the social gaming giant has lost 21 percent of its daily active users in the past year. Zynga had over 65 million active users every day throughout 2012, but maintained just 52 million daily users at the start of 2013.
Other issues have affected the company in recent months, including a first quarter profit of just $4.1 million. While the company has celebrated making a profit in the first quarter of the year after record losses of $85.4 million twelve months earlier, the modest income is troubling for a company of Zynga’s size.
What’s particularly troubling, however, is the way that Zynga achieved the profit in the last quarter. Instead of increasing sales, which have steadily decreased as Zynga has grown, the company reduced its spending by laying off over 628 employees and plans to cut even more staff from the company to further increase profitability.
Zynga has narrowed its focus in recent years, taking the ‘more wood behind fewer arrows’ approach to game development. Hits such as FarmVille have been followed by sequels, while some of the company’s less successful titles have been shut down and quietly replaced with more profitable alternatives.
The end of Zynga’s smaller titles has left the company with just two original games left in its line-up – Texas HoldEm Poker and FarmVille. The two titles, and sequels, make up over 50 percent of Zynga’s gaming revenues, with other titles bringing in just a fraction as much cash for the company.
Zynga is certainly not the only free-to-play gaming developer struggling to reach a consistently level of profitability. Other developers that relied on Facebook for new users have struggled to monetise as the social network increasingly focuses on its own advertising solutions.
