New poll: What does last week's Zynga announcement signify?
How much should we read into the operator backtracking on real-money gambling?
Following the release of underwhelming second-quarter financial results last week, Zynga chief operating officer David Ko revealed the company would not be pushing ahead with its pursuit of a real-money gambling presence in the United States.
While some foresaw this as a possibility following the appointment of Don Mattrick as CEO earlier this year, debate has reigned as to what lessons the rest of the industry can take from last week’s announcement.
Perhaps the first question that should be asked is whether the need to put RMG on the backburner is something specific to the San Francisco company. With revenues falling 31% year-on-year and a fledgling real-money poker and casino offering in the UK not pulling up trees, it could simply be a case of getting its priorities in order.
The free-to-play social casino space is continuing to grow, with Zynga’s rivals approaching if not surpassing it in terms of revenues, and the operator may simply feel it has more to gain from sticking to its strengths in this industry. IGT’s DoubleDown Casino seeing year-on-year revenue growth of 105% in its most recent financial figures arguably only adds to this argument.
Similarly, having been overtaken by King in terms of Facebook monthly active users (MAU), there is plenty of reason to focus on its not insubstantial casual games portfolio. But could this be a wider issue affecting not only the social space but also the real-money gambling environment? Operators and commentators continue to preach RMG-social convergence, but could this be the first sign we’re beginning to see limits to the possibility?
Of course, with Zynga continuing its UK test phase with bwin.party, there is also reason to argue that it is the market rather than the product which provides the main issue.
In the eyes of many the US is yet to offer up a realistic and favourable federal solution, with those states to have already regulated – including Nevada, where Zynga applied for a preliminary finding of suitability last year – considered by some to be too small or too restrictive.
With a number of failed pursuits of federal legislation, and with larger states such as Zynga’s home state of California yet to give indications of a capability to devise a workable regulatory regime, might the company have come to the conclusion that time spent focusing on an uncertain US RMG future could be better spent elsewhere?
To have your say on this week’s poll, see the right-hand side of the page.