Is it the end of the Social gaming era?

It started its downward spiral with facebook’s stock drop

With news coming in on both Zynga and Bigpoint laying off hundreds of people, it seems that the Facebook IPO put into motion a chain of events that may end in the death of social gaming in it’s current form.

It looks like the gigantic hype that made these companies and their product seem so big, was simply a big bubble that’s currently letting out its air in a long whine.

I can’t say I’m happy. I actually bought Zynga stock when it first came out, watched it climb up by 60% at first, and even though it was tied to facebook, which I would never invest in, I didn’t have the wisdom to sell then, and thought that waiting would be a better idea. It wasn’t. It plummeted to 2.77 from 9.5 by the time I decided to ditch it.

Errors in judgement teach you more than any other thing.

But I digress.

Facebook Social gaming hit the world in a storm, it shown growth exponentially, and also helped the online gaming in general to pick up momentum. However, it seems that people simply tired of spending good chunks of their days growing crops on farmville, or using up their free time to play with unknown people over the net. They moved on to other things, and the numbers show it.  Zynga closed down their Boston branch, cut down on their Chicago and Austin workers number, and are even considering closing down their Japan and UK studios. One of the main reasons for this is the decline in numbers of players in their new game “The Ville” which was supposed to be next new hit after the farmville era. Its numbers have been falling at a rate of 45% per month.

But that’s only a part of the big picture. They are retiring (or sunsetting as the jargon goes) 13 older games! that simply means more job cuts, and more “streamlining” (like a plane in a downward spiral). Zynga is actually letting go of 5% of its entire workforce. That’s big. Plus, they gave most of them about 2 hours heads up before they have to vacate the premises.

And.. as an industry leader, it points the way to other, smaller companies in this market who look up to Zynga as a directional beacon, and might see this as a “Go” sign for their own actions.

Meanwhile, in facebook kingdom, Zuckerberg is acting almost as if things are just dandy.  Yesterday he was quoted as saying, that even though the facebook gaming ecosystem “is not doing as well as I’d like”, “as a whole is growing with revenues from other game developers increasing 40 percent over the last year since Payments was made mandatory for game developers”. Does he really think this will last? Making game developers pay for putting their games on a sinking gaming platform does not look like a great idea to me.

But then again, he’s the billionaire, so what do I know? Or maybe he’s just trying to make things look rosier for his facebook investors who are watching their money circling the drain for months now..


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