Zynga Won't Pursue U.S. Real-Money Gambling
After announcing this week that it plans to abandon an effort to break into the nascent United States online gambling market, California-based social gaming company Zynga saw its stock price take a hit.
Zynga stock was down twenty percent after word began to spread that the company, headquartered in San Francisco, would not be moving into the real-money gambling space.
Expansion into real-money gaming was seen as a move forward for Zynga, perhaps best-known for its smash hit Facebook game FarmVille, as it has struggled to effectively break into the mobile market.
Move a matter of “focus”
Though Zynga has elaborated little on the shift in direction, on a conference call with investors David Ko, who serves as Chief Operations Officer for the company, said it was an issue of “focus.”
“As we looked at the social gaming, free-to-play opportunity which continues to grow, we’re not executing against that. And so, we really just centered around focus,” Ko told investors.
News comes on the heels of CEO shakeup
Earlier this month, Mark Pincus stepped down as CEO of Zynga, handing over the reins of the company to former Microsoft exec Don Mattrick. Pincus is still involved in the company, retaining a controlling 61 percent share of the company’s stock and remaining in place as its chief product officer.
For his part, new top man Mattrick said this week that the company must revise its vision to solve problems that have been plaguing the company as the popularity of Facebook gaming has dropped off and Zynga has failed to replicate its early success as more players want to play games using mobile devices such as smartphones and iPads.
“We are missing out on the platform growth that Apple, Google and Facebook are seeing. We have the ability to break some bad habits and get back to some good fundamentals,” Mattrick was quoted as saying.
In June, Zynga was forced to lay off 18 percent of its labor force as a cost-saving measure.
Company had sought licensing in Nevada
Also going to the wayside with the news that the company won’t be pursuing iGaming in the U.S. is an attempt by Zynga to gain an online gaming license in the state of Nevada, which passed a law to regulate online poker in 2011, making it the first state to enact legislation to permit regulated online wagering in the nation. Zynga is said to have withdrawn its Nevada application.
Reportedly Zynga is still planning to develop online gaming in regulated markets outside the United States, including in the United Kingdom.
“While the company continues to evaluate its real-money gaming products in the U.K. test, Zynga is making a focused choice not to pursue a license for real-money gaming in the U.S.,” read a statement released by the company.
