Social-gaming publishers Zynga have cancelled their project to launch real money gambling games in the US.
The company behind FarmVille and Words With Friends are expected to take a big hit in investor confidence following the announcement, with at least three brokerages so far cutting prices on the company’s stock.
The company’s new CEO Don Mattrick said: “There’s no denying we’re not where we want to be. We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters.”
Mattrick moved to the company from Microsoft’s Xbox division at the beginning of the July to take over founder Mark Pincus’s role. Mattrick has a reputation for moving “into organisation that have challenges”, but many wonder if Zynga is just a bridge too far.
The company found early success, raising millions from venture capitalists and its IPO in late 2011 was hotly anticipated. Early rises in share price however dropped before the first twenty four hours were out, and the company’s share price is less than $3.
However, Zynga’s success in social gaming has since been eclipsed by the likes of King and Supercell. The latter reported daily revenue of $2.4 million last month.
Like many tech firms the company is still trying to adapt in the rapid migration of users from desktop to mobile formats, with their userbase falling from 306 million to 187 million over the last year.