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In defense of Zynga

October 25th, 2012 at 10:00 AM
Zynga Analysis

It’s easy to badmouth the dumb moves Zynga (ZNGA) has made — the disastrous acquisition of OMGPOP, the strip-mining of the Ville franchises, the lack of skill-based games. On Wednesday night, Zynga shares finally rebounded a bit from the brutal swan dive that started right after the IPO. A share buyback program and UK gambling project offered a quantum of solace. Zynga has now sunk so low that even 3% annualized revenue growth comes as a positive surprise to traumatized investors reeling from a string of disappointments.

But it’s also worth noting that despite its stumbling and bumbling, Zynga’s position in the Facebook (FB) app universe remains astoundingly strong. Despite the obvious shortcomings of churning out an endless series of Farmville spin-offs and sequels, Zynga has been able to fend off all of its challengers. As measured by Monthly Active Users, Zynga’s current 315 million MAU level towers over Microsoft’s (MSFT) 67 million and Electronic Arts’ (EA) 37 million. These are huge, experienced rivals that have had years to develop effective Facebook app strategies. They have failed. Zynga is still beating them like drums.

The new Farmville 2 is a devastating indictment of Zynga’s lack of creativity and intellectual vigor. But it’s also a smash hit topping 61 million MAU level — far ahead of Instagram and TripAdvisor at 36 million and 32 million, respectively. After Farmville 2, the second most popular Facebook game is Texas Holdem with 36 million MAU and ChefVille with 28 million MAU. Both runners-up are Zynga properties. So are the next two most popular Facebook games, Bubble Safari and Slingo.

Every game in Facebook’s top-10 app chart has been created by Zynga. Zynga may be a soulless, incompetently managed company currently in shambles. But on the world’s biggest social networking platform it is beating all rivals — and particularly all game rivals — with absolute command. What does that tell us about the creativity and competence of other Facebook app vendors?

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