Zynga Shares Dive After Game Maker Says It Will Report Q3 Loss

COMMENTS (6)

• I don’t understand the economics of the web. It used to be you did something or made something and got paid for it. Now it seems people are terrified of charging for things in case it affects the all important big traffic number. 311 million monthly users may sound impressive but not when you’re making such a big loss to provide them with a service. Far better to have 30 million paying subscribers and turn a profit.
  Unless we want an economy based on charity where filmmakers and other IP creators beg for funds on Kickstarter, we need to get used to the idea of pauing for stuff again. And corporations need to stop encouraging consumers to believe they can get things for free by spending investors money on what is in effect a bait and switch con. Zynga is hoping to convert those 311 million into big money but consumers are too savvy. Look at Facebook. Their theory was lets provide a great free service, get people hooked and then work out how to make money. Trouble is, people loved the old free service and don’t like the intrusive ads, the sale of data or any of the things Facebook is doing to make money. Expect it to go the way of MySpace.
  Things will only get more difficult as more people use phones and tablets to access the web. Case in point, I’m reading Deadline on my phone, with no ads and I’m not paying a subscription. Why should I get quality content for free? And how do you run a business, pay staff, generate income for investment, and turn a profit in this new world.

  Comment by Fan — Thursday October 4, 2012 @ 11:53pm EDT  Reply to this post

  • You can still make something and get paid for it, but you get paid a lot less per person, because people are used to getting stuff on the internet for free or very cheap, so you need a lot more customers. Virtual goods cost nothing to replicate once you’ve invested in the original item, which makes getting a big volume of customers very valuable. Once people get used to getting somethng for nothing, that expectation has been set and is very hard to change.

    Ease of distribution globally is key – you need to seamlessly reach a huge audience. The internet means you no longer need costly brick & mortar stores but also means your potential customers’ attention is being captured by more competitors. The frantic race to drive up traffic numbers is because internet economies only work at high volumes.

    Or, you can pursue an advertising based strategy, which is the opposite idea – not big volumes but niche targetting. That’s why Google AdWords work. Then you can run into privacy issues as Facebook as found out.

    So, as ever, there are challenges to making a buck, just now the challenges are different.

    Comment by Temis — Friday October 5, 2012 @ 11:45am EDT  Reply to this post

• I remember not too long ago when Zynga’s market value exceeded that of Electronic Arts. It’s kind of gratifying to see the “premier” maker of brain-dead cookie-cutter cow-clicker games take such a dive. Crappy product, and now an aging business model.

  Comment by BryBry — Friday October 5, 2012 @ 3:07am EDT  Reply to this post

• This issue of a company not being able to get a fee for something has been with us since the start of the Internet run-up. It always seemed to me you could start a company and give away free pancakes, and you get lots of ‘users’. So you have 40 million people eating your free pancakes. And how is that a business?

  Comment by Mk — Friday October 5, 2012 @ 8:50am EDT  Reply to this post

• The end of FACEBOOK is near!

  Comment by THE TRUTH — Friday October 5, 2012 @ 12:39pm EDT  Reply to this post

• The worst and dumbest games on the net. Good bye, Zynga.

  Comment by Bonusbaby — Friday October 5, 2012 @ 4:00pm EDT  Reply to this post