That Facebook Falloff That Hit Zynga? Other Social Game Leaders Never Saw It.

Yesterday, Zynga said fewer people played its social games in the second quarter because of changes Facebook made to its network, which favored new games.

But other game makers say that wasn’t the case.

“Facebook makes changes all the time, but in the past three months, there was nothing that was super drastic from what we saw,” said Jens Begemann, the founder and CEO of Wooga, a top-five game developer. “If we launch new features or additions, then we see new growth. Facebook does have a lot of influence, so maybe they [Zynga] saw other things.”

Zynga got crushed yesterday after wildly missing analyst estimates in its second quarter, reporting a profit of one cent a share on revenues of $332 million, and saying that it was revising its full-year guidance based on a more conservative outlook.

Zynga’s stock continues to trade well below its $10 public offer price. Today, it’s down nearly 40 percent, or $2 a share, to trade at $3.09.

During Zynga’s earnings call, CEO Mark Pincus said three factors led to the disappointing quarter:

  • Declines in engagement and bookings due in part to changes Facebook made to its network, which favored new games.
  • The Ville launched late in the quarter.
  • Draw Something, which it acquired for $210 million, is not meeting expectations and suffered a dramatic decrease in daily active users.

Begemann said between the first and second quarter, the company’s traffic from Facebook was stable. And when also taking into account traffic that Facebook generated for its mobile apps, “it was growing so fast.”

Alex Dale, the chief marketing officer for King.com, had a similar story.

He said that the company’s daily active user numbers were stable between the first and second quarters even though Zynga and others launched games that were very similar to its biggest hit, Bubble Witch Saga.

Furthermore, Dale said he did not notice any drastic adjustments by Facebook that changed anything for the company. Instead, he theorized that Zynga is suffering as consumer appetite shifts from so-called resource-management games to more casual titles.

“Facebook is constantly evolving its platform on ads, social graph and microtransactions,” he said, and blaming Zynga’s losses on Facebook “doesn’t make sense.”

Wooga did not launch any new games in the quarter, which is where Zynga did see a huge lift in usage. For instance, when Zynga launched its latest title, The Ville, it got 4.5 million installs in day one to break the company’s all-time record.

Following Zynga’s earnings, Citi’s Neil Doshi downgraded the stock to “neutral/high risk,” adding that “while we are positive on the long-term prospects of Social/Mobile gaming, and think Zynga has a clear advantage to be the leader on these platforms, the near-term fundamentals have started to crack … we’re moving to the sidelines until we can see improvement in ABPU [average bookings per user], growth in engagement on Facebook and off, expanding into new genres, and producing higher monetizing games.”

Both Begemann and Dale said their companies are seeing a large amount of traffic coming from Facebook to their mobile apps.

The Wooga founder said that Facebook is driving about 20 million referrals to its games in the iOS App Store every month, and that they are seeing downloads into the millions because of both Facebook and word of mouth every month.

“Facebook is criticized for its mobile efforts too much, but I think they are doing a great job for us,” he said.


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