While many investors in Zynga had pinned their hopes on the company doing well in the regulated US market, the surprise announcement that Zynga will not be entering it comes somewhat of a shock. It's reported that Zynga has lost up to 40% of its monthly active users in the second quarter with many mobile gamers going elsewhere. Shares nosedived 14% on the news and in a statement released by Zynga they said that, "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 offerings." This will be a little hard for many investors to take as Zynga did state that it could and would tap into the US market and has already entered the real money UK market.
Online gaming is still only regulated in a few states, with only one real money site operating at present, Ultimate Poker in Nevada, and it could be years before any real profit is made on that front and maybe this has swayed the decision by Mattrick and Co. Mattrick did offer his own words on the subject stating that, "We need to get back to basics and take a longer term view on our products and business, develop more efficient processes and tighten up execution all across the company." This is all a far cry from just a few years ago when Zynga seemed untouchable at the top of the social gaming ladder, it's games played by millions around the world, buying out smaller rival companies and setting up offices and design studios as and where they saw fit. The number of active monthly users is now at 187 million, which has dropped from the 306 million it was a year ago, and of course revenues are way down, in fact, 38% down. Many are pointing the finger at deals such as the $200 million paid for OMGPOP and the lack of a return from the game Draw Something 2. Whatever it is the U-turn has now been made and it really is back to the drawing board for Zynga with Mattrick adding that he would be spending the next 90 days, "heads down" with his team.
