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King Digital winning, Zynga losing in games wars
February 12, 2015 / 9:22 PM / 3 years ago

King Digital winning, Zynga losing in games wars

(Reuters) - The fickleness of the gaming industry was on full display in the earnings reports of “FarmVille” creator Zynga Inc and “Candy Crush” maker King Digital Entertainment Plc.

Player avatars from Zynga's FarmVille 2 are seen on a stairway at the entrance to Zynga headquarters in San Francisco, California April 23, 2013. REUTERS/Robert Galbraith

Zynga’s shares fell 10 percent while King Digital’s soared 18 percent in extended trading on Thursday after the companies reported contrasting fortunes in a key industry metric.

King’s total gross bookings, an indicator of future revenue, increased 8 percent to $586 million (381 million pounds) in the fourth quarter, about $45 million more than the average analyst forecast.

Zynga reported bookings of $182.4 million, about $19 million less than expected, according to research firm StreetAccount.

The company, whose market value hit more than $14 billion in 2012, lost most of its shine after failing to come up with new games to match the popularity of “FarmVille”.

It was also caught off guard by mobile-focused rivals such as Dublin-based King Digital and Supercell, the maker of “Clash of Clans” and is now valued at about $2.4 billion.

King, which went public last March, has a market value of about $4.6 billion.

Zynga said on Thursday it would launch six to 10 new mobile titles this year as it tries to reverse its fortunes.

The corporate logo of Zynga Inc, the social network game development company, is shown at its headquarters in San Francisco, California April 26, 2012. REUTERS/Robert Galbraith

“We will deliver a 100 percent mobile-first new product slate featuring new games, with a goal of ending 2015 with more than 75 percent of our fourth quarter bookings coming from mobile,” Chief Executive Don Mattrick said in a statement.

King, which already gets 78 percent of its gross bookings from mobile, launched a portfolio of hit new games last year, including the popular “Bubble Witch 2 Saga” as well as a new version of its smash hit “Candy Crush Saga”.

That helped it to avoid the fate of Zynga and “Angry Birds” developer Rovio Corp, which is also struggling to grow.

King Digital’s revenue and profit easily trumped market estimates as its newer games more than made up for the declining popularity of older titles.

Zynga’s main launch, the multi-player word game “Words with Friends”, failed to excite gamers and launches aimed at the Chinese market failed to live up to expectations.

The company said it would close its Beijing office and lay off all 71 employees.

Zynga’s forecast for bookings in the current quarter also fell far short of estimates, according to StreetAccount.

Up to Thursday’s close of $14.74, King Digital’s shares had risen 10 percent in the past six months. Zynga’s shares had fallen 7 percent to $2.66.

Reporting by Subrat Patnaik in Bengaluru; Editing by Kirti Pandey

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