Words With No Friends

October 24, 2012

zyngaWhile the rest of the country was tuning into yesterday’s announcement from Apple (regarding the new iPad mini), online gaming company Zynga was quietly laying off 5 percent of its full-time workforce. The deviously timed layoffs included shuttering 13 of the company’s games, as well as closing down its newly acquired Boston office.

Zynga is behind the majority of the most popular online games, including FarmVille, CityVille, Words with Friends and Draw Something, but seems to be having trouble monetizing its large user base. After its highly touted public offering last December, Zynga has struggled with a decline in both users and earnings. After its stock price peaked at around $15 in March, the stock has lost 85 percent of its value. Yikes.

Even the incredibly popular Draw Something, which boasted 50 million downloads in 50 days, is struggling and hemorrhaging users. After peaking at near 15 million daily active users in April, the app now draws in closer to two million users.

We at Fast Horse have certainly followed the bell curve. Dave wrote an ode to FarmVille almost exactly two years ago, only to reveal to me that he lost interest in the game only a few months later. I was the same way about Draw Something this past spring, going from playing multiple games every night to losing interest as my friends slowly dropped off.

However, the audience potential for advertisers on Zynga is still huge. The Words with Friends app boasts close to 13.5 million monthly users alone (for reference, the Washington Post mobile site gets around 2.9 million monthly visitors), and Zynga has over 311 million monthly active users in total.

The only catch is that advertisers seem to be approaching the social games with hesitation, despite the large audience. While several advertisers, including Century 21, Bing and McDonald’s, have experimented with brand integrations on several of Zynga’s platforms, it’s always been on a short-term, test-run basis. Even no-nonsense integrations like branded terms in Words with Friends seem to be slow to come to life.

I say play your FarmVille, Words with Friends and Draw Something games like it’s the last time, because the end may be closer than you would like.