Zynga Posts Huge Loss

It seems as if everyone is looking to casual free-to-play social gaming in our current market. The old 60-dollar game model is starting to die, and microtransactions are becoming more and more accepted by the gaming public.

But maybe social gaming isn’t all it’s cracked up to be, as social gaming giant Zynga has actually posted some significant losses in the third quarter.

In Q3 2012, Zynga reported a whopping $52.7 million loss, as opposed to the $12.5 gain experienced in Q3 2011. That being said, their raw revenue is actually up this year, $316 million as opposed to $306 million from Q3 2011.

Expanding the view to the entire year, we see more of the same. Raw revenue is up, $970.1 million as opposed to $828.8 million from last year, but net profits are down, posting a loss of $160.8 million as opposed to a gain of $30.6 million last year.

As a result, Zynga is getting smaller. Zynga Boston has been closed and Zynga Austin has experienced serious layoffs. Zynga estimated that it will lay off 150 people in order to offset this loss, as well as any number of contract employees. It has already laid off  100 employees, as we reported yesterday.

So yeah, maybe social gaming isn’t the moneymaker Zynga thinks it’s cracked up to be.

by Angelo M. D'Argenio
10/25/2012 11:10AM


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