Many top gaming powerhouses have clicked on to this trend in time but for Zynga they seemed to have lost their way and have suffered heavy losses since the IPO launch. With major shakeups in the last year which have included a new CEO, significant staff cuts and new management personnel Zynga looked for other avenues to restore their former glory. One of their major hopes for turning things around was entering the real money gambling arena. We reported extensively what they have done to make this a reality including the launch of ZyngaPlusPoker and ZyngaPlusCasino in April for UK players. This real money gambling option is seen as the ideal testing ground for Zynga’s other potential markets and especially that of the U.S. online gambling market in which they hoped and planned to be a major part of.
This new strategy was seemingly paying off as many investors were prepared to believe that entry into the multi-billion dollar U.S. online gaming market could be just the remedy for the waning social gaming powerhouse. In fact since the beginning of the year Zynga’s share price rose by 48%.
Unfortunately things came to a halt this week when Zynga announced their intentions that they were not going to pursue real money gaming in the U.S. In a statement they said,” Zynga is making the focused choice not to pursue a license for real money gaming in the United States. Zynga will continue to evaluate all of its priorities against the growing market opportunity in free, social gaming, including social casino offering.”
This unexpected development led to the share price plummeting by up to 17% and the coming weeks will tell if newly appointed CEO Don Mattrick will manage to stop the bleeding. Way back in December 2012 we asked the question if Zynga was punching above its weight in their attempt to enter the real money gaming arena in which they would have to compete with established gaming companies like PokerStars, MGM and Caesars who have decades of hands on experience in the U.S.
We look forward to following their progress and wait to see if their newly found strategy of refocusing on social gaming pays off or they come up broke.