Can Zynga Inc (ZNGA) Get Back on Track?

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When Zynga Inc (NASDAQ:ZNGA) came up with its ‘social games’, everyone from the analysts to industry experts hailed it as the ‘next big thing’, but over the years the company has failed to deliver on the promises that its once made. Zynga Inc (NASDAQ:ZNGA) reached wide variety of users, thanks to the user base of social networks like Facebook and Twitter, but it hasn’t been able to maintain its popularity. All the initial game releases from Zynga Inc (NASDAQ:ZNGA) like Texas HoldEm Poker, Mafia Wars, Farmville found success among online gamers, but it has been more than five years since these game releases.

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So, how Zynga Inc (NASDAQ:ZNGA) ended up being where it is today? Bloomberg’s Cory Johnson explained the story of Zynga Inc (NASDAQ:ZNGA) ever since its inception.

“In the beginning the social gaming company was started by a Harvard MBA, Mark Pincus, already the veteran of a handful of silicon valley start-ups. Named for his bulldog, it became Zynga Inc (NASDAQ:ZNGA) and had the good fortune to tie itself to a young Facebook. Launching Texas HoldEm Poker on Facebook in 2007, mega hits followed Mafia Wars in 2008, Farmville in 2009 and quickly Zynga Inc (NASDAQ:ZNGA) became the number one app maker on the social network,” Johnson said.

Johnson went on to highlight that after the success of these games, Venture investors, which included Google swamped to invest in Zynga Inc (NASDAQ:ZNGA). By the end of 2009, Zynga Inc (NASDAQ:ZNGA) had 207 million active users, out of which 28% were there on the site every single day, but problems started to emerge soon as hardly 2.5% of the users paid Zynga Inc (NASDAQ:ZNGA) anything. Johnson mentioned that when Zynga Inc (NASDAQ:ZNGA) went for its IPO, it was using unusual accounting practices by counting its future earnings into the present, without which the company would have shown a loss each quarter.

Zynga Inc (NASDAQ:ZNGA) got a new CEO, Don Mattrick, last year on a hefty salary, but even after an year of getting the new CEO, the company is still facing the same problems of dwindling user base and not coming up with another successful game.

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