I think they may turn out to be a very good long term bet. Pincus is quite directly attempting to mimic Bezos' strategy with Amazon. He's in control and he doesn't care (much) about the short term stock price.
Zynga is in the best position to profit from the rise of social/casual gaming. It may take 10 years but they could quietly grow into the behemoth of gaming the way that Amazon did in shopping.
Bezos has a product that has incredible staying power and enormous infrastructure and capital-intensive advantages over its competitors, making it very, very hard to clone. Many have tried, all have failed.
Zynga, in comparison, does not. A 10-person team can execute just as well as their behemoth of a company, and that makes their market a hell of a lot more competitive than online retail.
> "Zynga is in the best position to profit from the rise of social/casual gaming. "
Zynga is not casual gaming. PopCap is casual gaming. Nintendo is casual gaming. Rovio is casual gaming. Zynga is gambling under a thin veneer. Zynga is "social gaming" in the way we've redefined it in the last couple of years.
And even there, I'd argue the "rise" of social gaming is already behind us. Remember when everyone was playing Farmville? Like, everyone. Now, it's completely dropped off the mainstream consciousness. Sure, they have plenty of players still, but it's a sharp decline in mindshare from just two years ago.
The world had its turn at the "glorified slot machine" formula, and most people have moved on. I heartily argue that Zynga's best days are already behind them, short of pivoting into a wildly different formula for social gaming.
There was a time when it was actually popular on Facebook, and many people were playing it, including myself for a time.
It just got old. You can't spend that kind of time on a single game forever, and since a significant part of its value was social, once friends stopped playing, everyone stopped playing.
They were right to buy Draw Something and WWF, because that is truly what everyone is now playing. But that's all it is—that's just what they're playing right now. Unless they can innovate and come up with or buy a new concept and monetize on it quickly, they're truly screwed. The popularity cycles of these things are measured in weeks or months at most. And it's hard to keep doing the same thing over and over again—it's not a business model I would bet on. The stock price reflects my opinions quite nicely here.
> Pincus is quite directly attempting to mimic Bezos' strategy with Amazon
Well, that's a terrible strategy if that's what he's doing. Zynga has almost been entirely dependent on acquisition throughout their history in order to grow their gaming lineup. Without a strong stock, they won't be able to make those deals without paying out cash. They have a bunch of cash right now, but that's only sustainable for so long for them.
Zynga is in the best position to profit from the rise of social/casual gaming. It may take 10 years but they could quietly grow into the behemoth of gaming the way that Amazon did in shopping.