After two big blows in succession–downgraded earnings forecasts, followed by 5 percent layoffs and the end of its studios in Boston, Japan, and the UK–Zynga’s third quarter earnings report exceeded the Street’s “rock bottom expectations.” That might explain why after hours trading is currently up 13.6 percent.
Zynga had predicted a net loss of $90 to $105 million for the third quarter, but only reported a net loss of $52.7 million. The company attributed part of that loss on a $95.5 million impairment charge on its acquisition of OMGPOP, the New York City-based makers of Draw Something. Zynga also said that a 28 percent sequential decrease in monthly unique payers (MUPs) from the second quarter (4.1 million) to the third quarter (3 million) as “largely driven by Draw Something.”
However, it’s worth noting that AppData shows monthly active users (not payers) for Draw Something as 10.2 million. As Zynga’s chief mobile officer David Ko noted this summer, sites like AppData only measure usage via Facebook integration, which he called, “[just] a portion of the actual number.” And if anyone can figure out how to turn users into payers, it’s American Idol‘s Ryan Seacrest, who just happens to be executive producing a TV pilot based on Draw Something. So stay tuned?
On an earnings call about this afternoon, CEO Mark Pincus began by saying, “The last several months have obviously been challenging for us,” before going on to outline a plan to fix that. Besides yesterday’s steep cutbacks and layoffs–the company is also sunsetting 13 games–Zynga plans to remain “well positioned to capitalize on social gaming,” by refocusing on mobile. He attributed some of Zynga’s setbacks on “faster than expected player adoption of mobile smartphone and tablets.” A familiar refrain to anyone who heard Facebook’s first earnings call too.
Zynga may have an easier time adjusting to mobile than Zuck, though. The company says it owns three of the top five most popular mobile games and that, “In the past year, we’ve generated a large audience and a business that represents 20 percent of our bookings.” The company is also reorganizing its game teams to “unite” web and mobile development. Additionally, it will be work on developing more “high-engagement games,” like Zynga Poker.
Speaking of just how engaging gambling can be, along with its earnings report, Zynga sent out a press release this afternoon announcing an exclusive partnership with the online gaming company bwin.party. “If you say it out loud, it sounds like ‘boring party,” observed Betabeat star intern Myles Tanzer. The deal, however, should prove anything but. Through the partnership, Zynga plans to offer so-called “real money games” in the UK, where gambling laws are less dire than the U.S.
Nearly every question during the earnings call attempted to get more details about the partnership out of Mr. Pincus and and CFO Dave Wehner, who declined again and again to offer specifics beyond the fact that it would “offer real money online Poker and Casino games in the UK market,” in the first half of 2013.
A question from CITI regarding whether this was a merely a ”brand licensing deal” or would actually involve more lucrative “game development and integration,” was also left unanswered. However, Zynga did emphasize that this deal was specific to the UK. Considering that bwin.party, which is incorporated, licensed, and regulated in Gibraltar, but also has licenses in France, Italy, Spain and Denmark, that may mean Zynga is exploring other partnership options for real money gambling overseas. And bwin.party’s loss might be Betable’s gain!
October 24, 2012
Zynga Partners With bwin.party to Launch Real Money Games in the UK
SAN FRANCISCO, Oct. 24, 2012 (GLOBE NEWSWIRE) – Zynga (Nasdaq:ZNGA), the world’s leading provider of social game services, and bwin.party, the leading international real money gaming operator, today announced an exclusive partnership to offer real money online Poker and Casino games in the UK market. Zynga’s UK-based RMG service and bwin.party will launch RMG products including Poker and a full suite of 180 Casino games in the first half of 2013, which include table games such as slots, roulette and blackjack.
“Bringing together Zynga’s expertise in social gaming with the top international real money gaming operator is the best way to create the highest quality gaming experiences for our players in the UK,” said Barry Cottle, Executive Vice President, Corporate and Business Development, Zynga. ”Partnering with an established leader like bwin.party is a strategic and prudent way for us to enter a key RMG market while giving local players the real money games they’ve been asking us for.”
“Today’s announcement is another example of our success in leveraging our assets through strategic blue-chip partners,” said Jim Ryan and Norbert Teufelberger, Co-CEOs of bwin.party. “Zynga is the world’s leader in social games with hundreds of millions of active players worldwide and a significant player base in the UK. We are delighted to have been selected as their chosen partner for this important step in their evolution, and hope to expand our relationship into other products and markets.”
Zynga’s real money UK poker customers will join the bwin.party dotcom player liquidity pool — getting the benefits of playing on the largest regulated poker network. Zynga’s UK-based RMG service will be powered by the established operating platform, software, and related support of bwin.party.
In addition to the full suite of Casino and Poker games, Zynga’s UK-based RMG service will also leverage the company’s world renowned entertainment brand, FarmVille, to offer local players the first-ever, online FarmVille-branded real money slots game.
Zynga’s UK-based RMG service will operate under bwin.party’s Gibraltar gaming license.
The Zynga Inc. logo and bwin.party logo are available at https://zynga.box.com/s/ulp051ta7l5mzusfg2r7
Zynga Inc. is the world’s leading provider of social game services with 311 million monthly active users playing its games, which include Zynga Poker, Words With Friends, Scramble With Friends, Gems With Friends, Draw Something, FarmVille2, ChefVille, CityVille, Bubble Safari and Ruby Blast.Zynga’s games are available on a number of global platforms, including Facebook, Zynga.com, Google+, Tencent, Apple iOS, and Google Android.Zynga is headquartered in San Francisco, California.
bwin.party digital entertainment plc (LSE:BPTY) is a global online gaming company, formed from the merger of bwin Interactive Entertainment AG andPartyGaming Plc on 31 March 2011. Incorporated, licensed and regulated in Gibraltar, the Group also has licences in France, Italy, Spain and Denmark. With offices in Europe, India, Israel and the US, the Group generated total pro forma revenue of €816.0m and pro forma Clean EBITDA of €199.3m in 2011. bwin.party commands leading market positions in each of its four key product verticals: online sports betting, poker, casino and bingo with some of the world’s biggest online gaming brands including bwin, PartyPoker, PartyCasino and Foxy Bingo. The Group’s scale, technology and strong portfolio of games collectively differentiate its customer offer from those of its competitors. bwin.party is a constituent member of the FTSE 250 Index and the FTSE4Good Index Series, which identifies companies that meet globally recognised corporate responsibility standards. For more information about bwin.party, please click here.