Lauren Goode

Recent Posts by Lauren Goode

It’s Complicated: At E3, Core Gamers React to Zynga’s Distress

As everyone knows by now, Zynga’s in a bit of trouble. The social gaming company laid off 18 percent of its workforce last week — 520 employees — as it tries to find its footing in mobile.

But at the E3 conference, an event that has traditionally been geared toward core gamers, many attendees aren’t as concerned with Zynga as you might think a bunch of game-industry folks would be.

In fact, some say it’s a toldja moment.

“These people don’t care about Zynga,” said Wedbush Securities analyst Michael Pachter, who has been consistently bullish. “It’s a different animal, social gaming. But Zynga will do fine.”

David Wood, an independent games consultant who previously built mobile games for MTV and Nickelodeon, concurred: “Some say, ‘Aha, I knew it was coming!’ Others sort of feel badly because maybe they know people at Zynga, or maybe they’re trying to get into that space. But at the end of the day, it’s just another sign of volatility.”

This dismissive attitude stems mostly from the resistance on the part of the core gamers to really accept Zynga — or any casual, social, or mobile-only game maker — as one of their own.

When news of the layoffs broke, “there were people in my Twitter feed who actually celebrated, to the point where I had to step in and say, ‘Look, this is someone’s livelihood,'” said Michael Futter, editor of Game Informer. “These are people in the core market who are disgusted with the habits Zynga has introduced to gaming.”

The “habits” refer to Zynga’s model of selling virtual goods through in-app purchases, often to advance the game. Industry jargon like “whales, dolphins and minnows” is used to describe big spenders, sometimes-spenders and those who take advantage of free-to-play, but not the freemium features. Within free-to-play, there are “ethical” models, and then there’s Zynga, serious gamers say.

Of course, it all depends on whom you ask. For a group that professes not to care about Zynga, most of the people I spoke to seemed to have strong opinions on the matter.

One investor said Zynga is mostly definitely a topic of interest — if only a cautionary one.

“I think people here care about Zynga,” said Nassar Batley, managing director of a digital media and gaming investment firm. “The investment community needs to be looking at Zynga as an example of what went wrong and be more cautious.”

E3, on the whole, isn’t totally oblivious to the mobile or social gaming world. This year, for the first time, there’s a section of the conference dedicated specifically to “mobile and online games,” although this is set apart from the main show floor and, so far, has attracted only a modest crowd.

Zynga, it should be noted, is not present in this section at the show.

Many in the industry are quick to point to Electronic Arts as an example of a core-gaming company that has thrown a lot of weight behind social gaming.

But EA has had its own rounds of layoffs, and in April announced that it would kill off Facebook games The Sims Social, SimCity Social and Pet Society.

Cautionary tale, indeed.

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