Reply With QuoteThey were always illegal, and last year the USA finally managed to block all common means to actually deposit money to their services. The government showed that they weren't fucking around by arresting a bunch of poker site owners as well.
I'm a little lost here. Hasn't online poker (with real money) been going on for years now (PartyPoker.com, 888.com etc?). I thought there were a few news articles a few years back of students either paying their education bills via them or getting heavily indebted?
They were always illegal, and last year the USA finally managed to block all common means to actually deposit money to their services. The government showed that they weren't fucking around by arresting a bunch of poker site owners as well.
stusser you absolutely nailed the housing crash months in advance 5 yrs ago / if you say buy $znga here i say how high?Originally Posted by stusser
6 years ago, actually.
I think Zynga is right at ~$7.5 and media coverage is pushing it down. But I don't have the balls to invest my own money, much less tell other people to invest theirs, so take that with salt.
PokerStars very recently settled with the US Justice Department. They paid out a chunk of change, were given the assests for FullTiltPoker (as long as they pay out the money owed), and will not have anyone go to prison for money laundering. Part of the agreement explicitly states that PokerStars will be allowed to operate real-money poker games once US regulation has been established.
No idea when that will happen, but it's another indication from the government that they consider internet gambling an inevitibility in the states.
At the moment, it's technically illegal for any company to allow a US based player to participate in online gambling. For years the offshore poker sites essentially ignored the law until the Justice Department decided it was time to crack down. The supposed trigger for this was that the US made agreements with most banks to no longer allow money to move from the US to known offshore poker providers. The poker sites instead set up ways you could funnel money through to the sites. Several poker site owners/operators along with several banks got caught in the money-laundering crackdown.
Now, to relate this to Zynga. Zynga Poker could technically be considered gambling, but since they don't take a portion or pots nor do they allow cashing out, they essentially get to operate the perfect business. People are technically gambling, but legally, and Zynga doesn't have to pay a dime outside of operating expenses.
If they don't take a rake and don't allow players to cash out, it's not gambling at all. I don't see how they'd make money on such a thing-- I guess advertising, etc.
It's not gambling if you can't win money. You can spend money for chips, however, but that's pretty much like any other transaction-based game.
--- Alan
Morningstar puts the fair value of ZNGA at $8 and their analyst gets Zynga's business and the challenge of keeping the whales hooked. The problem is it has such a short live as company much less a public company that it is really hard to value it. It seems to me that it is equally like the stock will hit 0 as bounce back to $7.5-$8
Here is M* latest note.
After an extremely disappointing quarterly report, we are placing Zynga ZNGA under review. Zynga's dominance in the Facebook FB ecosystem seems to be waning, while recent acquisition OMGPOP (makers of Draw Something) has been an underperformer in the mobile segment. While we believe Zynga is better positioned than most of the mobile-gaming market, we need to revise our model to reflect a more pessimistic near-term view. After the recent sell-off, we believe the company is modestly undervalued today, but we would not encourage investors to allocate new money to this stock.
They also probably don't need to take a rake with all of the other chip sinks that they have (avatar items, etc.). At least, I'm assuming that helps keep the economy from inflating.
It won't hit 0, they'll be bought out before any disaster scenarios.
My feeling is they will sit in the sewer for months until Pincus is forced out, they get bought out, or the online gambling deregulation comes through and they get favored nation status for gambling on facebook.
Also it remains to be seen if apple will allow gambling in their app store. Even if it's legal, do they take their 30% for depositing money through "in-app purchases"? How does that work?
I do, and I always try to get my friends to as well. I've purchased possibly everything Soren and Brian have ever worked on or had some involvement with. So I'm not sure why you're yelling at QT3 since I'm sure we all do everything we can. My complaint is who's leading the Zynga. Why isn't anyone yelling at Pincus for blowing $43 million dollars to recruit someone they kept for a whopping 1 year?
Zynga may have much of the top talent in the entire gaming industry and look at what they're still shoveling out - updates of other people's games? That's been Pincus's calling card all along. So when this plan fails, where are calls for his head?
That seems to be HIS MO. Maybe the real reason John Schappert is being forced out is because he didn't bring in a buyout opportunity from EA. John promises he can convince EA or others to create a huge payout for Pincus... it doesn't look like it'll happen, and John's out.
Last edited by jpinard; 08-01-2012 at 05:23 PM.
He is getting yelled at by seeing the stock price tumble. Believe me, that's hitting him where it hurts.
Why? He sold his shares at $12.
According to this article, he still owns roughly 40% of the outstanding shares and is the single largest shareholder (individual or institutional). Basically, he got hit the hardest by the drop, from a purely mathematical standpoint.
http://247wallst.com/2012/07/26/remi...a-or-facebook/
No he isn't, unless he's yelling at himself (which he obviously isn't doing). Zynga is still pretty much a wholly controlled entity by him.
Companies where shareholders have no power at all (see Zynga at #11)
I'm pretty sure Mark's point is that the hit in the pocketbook matters to him more than yelling shareholders. I agree with Mark. Whatever your thoughts on Pincus and gaming culture, one would think he's doing his best to try and get the share price up. You may disagree with his strategy for doing that, but you can't say he isn't feeling the consequences of the drop.
In that case he can't be forced out. The only options are for the company to get bought out or find sudden success in gambling. Or start making fun games, I guess, but I don't see that happening.
Maybe other type of stuff than games? Zynga can copy chat roulette, twitter, reddit, stackoverflow and addapt these for the Facebook environment.
And what about toys? Can have some tamagotchi game.
Other option would be become a publisher for other people games, some sort of EA.
The monetization potential there is amazing. Think about it! Pay to have the system automatically filter out penises. Pay more to override people who bought that filter! Cha-cha-ching!
That seems right. Pincus strikes me as a typical pump and sell promoter. This is extremely common in the oil business. One way or another they set up the situation so that they're walking away with tens of millions no matter how the company actually perfOrms.
I think next chapter of this story, sadly, is cost cutting at $znga
Seems semi-relevant:
http://www.reuters.com/article/2012/...87614R20120807
Facebook enters on-line gambling, in UK where it is legal for 18+ I guess. Zynga is not the partner there. Zynga is mentioned in comparison for the revenue deal cut though.
It's somewhat related to this topic, but could have also been mentioned in the 'state of the industry' thread: I thought Tadhg's Kelly's outlook the social games is really interesting. Some will disagree, some will agree, but it's definitely engaging.
Brief excerpt:
Poker remains the steadiest Zynga game by far because it has a game dynamic that works. Almost all its other games are reliant on content, and pacing. While some social game designers continue to insist that this is a good thing, its the users who ultimately decide if it is. So without constant and heavy promotion, social games tend to fade away pretty quickly. For all of the development effort that gets put in to making new games, makers like Zynga seem to mostly just push existing users around (which leads to wondering whether they really need to make new games at all), stealing from Peter to pay Paul. And occasionally trying to buy a bulk of news users to add to the mix (which is what the Draw Something purchase was all about).
Long story short, the fundamental problem remains that the business model of social games is hollow because the value it provides is poor. Different providers compete against each other to look good (not unlike most other game sectors), but equivalent value is not the same thing as actual value. That’s the same trap that Atari fell into.
Thinking and acting equivalently leads to a case of “When Plan A doesn’t work, go to Plan A”, and Zynga is not alone in this. EA Playfish’s original games are all dying off, to be replaced by EA branded games which struggle to stay popular. Playdom is rarely heard of any more, and its once-vaunted Social City game has dropped to a mere 40k MAU. Digital Chocolate is in fast retreat, and Wooga is merely holding steady.
In other unsurprising news: Schappert quits.
Can't thank you enough, just read the whole thing and loved it.
I would so love to have a frank, open conversation with John. The stories he must have but can't tell :(
Saw this one mentioned in the recent DFC newsletter: very extensive article arguing Zynga has problems with user retention due to their lack of overall quality and brand loyalty among other things.
Excerpt:
Branding is a long term commitment that requires careful management of a franchise. The game industry has numerous examples of game fads that quickly burned out, often due to oversaturation. Even strong brands can’t escape saturation and player fatigue. Activision’s Tony Hawk and Guitar Hero franchises are examples of that. EA Sports is one of the few examples of where a franchise can be continually pumped out, mainly because of the loyalty to the underlying sport. Even with the incredibly popular Call of Duty there is an issue of how many games Activision will be able to pump out before there are diminishing returns. Meanwhile, a company like Blizzard whose inability to pump out quick sequels to WarCraft, StarCraft and Diablo may in fact help maintain the brands demand over time.
The problem with Zynga is they seem to have quickly hit the saturation danger point, when too many essentially similar titles in essentially similar genres generate decreasing returns. A FarmVille begets a CityVille begets a FrontierVille, but the attachment consumers form with each succeeding and very similar game is weaker and shorter in duration.
Once again, there are many historical trends of this occurring in the game industry, even among core gamers. In the late 1990s, there was a boom in real-time strategy (RTS) games that quickly led to a flood of new products. What eventually happened was that even the best new entries in the genre had fewer users, as they were all targeting a subset of the established user base. There was a declining percentage of gamers willing to make the jump from Command & Conquer to Dark Reign to Warzone 2100, or from Age of Empires to Total War to Empire Earth to Rise of Nations.
Rumor on the Twitters is that Zynga has shut down or laid off a significant number of staff at several of its studios. It seems the moves were made during the Apple press conference announcing the new iPad.
- Jon
Bigpoint announced that they're going to kill 120 jobs and shut down their San Francisco office at around the same time. Oh the coincidence.
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