A recent filing (archived) with the United States Securities and Exchange Commission show that one once hyped Facebook centric "game" maker Zynga is continuing to bleed both users and money. Zynga has lost more than 73 million United States dollars since the beginning of 2015. From 2012 through the close of 2014 Zynga has lost roughly 472 million United States dollars. Average monthly users of Zynga's products was reported to have fallen from 121 million in 2014's second quarter to 83 million the second quarter of this year, a decline of 32 percent. In spite of Zynga's hemorrhaging wallet and shrinking userbase shares still manage to trade on Nasdaq (archived) at $2.64 per share implying a market cap of $2,072,302,357 on a earnings per share of negative 19 cents.
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Qntra - Herald Of The Most Serene Republic |
I feel sorry for all those college kids who got suckered during the obscene over-the-top campus recruiting blitz these jokers put on around 2012-2013…
gbangratulations
It's the Hungarian Revolution problem. Zynga's entire model is based on the assumption that intermittent reinforcement of "monetizing behavior" will yield very slow extingiushment of that behavior. As Skinner's disciplines such as Galanter discovered, intelligent creatures will eventually revolt against this intermittent reward schedule. The experimental evidence (from pigeons — poor creatures) shows that after some time with an intermittent reward schedule of food pellets yielding on average starvation diet rations, pigeons will cease the required behavior (pressing a button to randomly receive a pellet), resulting in their death by starvation. They just revolt against the bullshit. This is called the Hungarian Revolution experiment b/c it explains why Hungary, a country that relied on the largesse of Moscow for its economic survival, would nevertheless revolt against its oppressive big brother. I think the same kind of rapid extinguishment cliff and user revolt is coming for many bullshit purveyors of crappy centralized software! One can hope, anyway.
Very interesting stuff.
Although compelling I don't think this is completely the case. For "freemium" games 1% of the user base accounts for over 90% of the revenue. The effect of the reward system is more akin to addiction than anything at its core. Most users have a normal reaction to the system and don't spend any money, the small percent who can't control themselves end up spending excessively.
Based on some of the research, I would say the collapse of Zynga is their user base addicts "treating" their disease thus spending far less. If your monetization strategy relies on some consistency in the dysfunctions of the user base, at some point when the user base starts acting sane, your company is gonna have cash flow problems.