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Zynga DAUs drop despite 5 launches in as many months

Tue 29 Nov 2011 9:06am GMT / 4:06am EST / 1:06am PST
Business

Social firm has shown no significant growth in DAUs since October 2009

Social games giant Zynga has been unable to reignite user growth for its games despite launching five titles in as many months.

According to analysis from Cowen & Company, Zynga has shown no growth in daily active users (DAU) since reaching it current average levels of around 47 million players in October 2009, despite increasing the frequency of releases.

Between June and October 2011 the company released five new games: Empires & Allies, Pioneer Trail, Words with Friends, Adventure World and Mafia Wars 2. But total DAUs declined for the company's portfolio over that five month period, from 49.2 million to 46.9 million.

"While DAUs have ticked up slightly over the last month, given the launch of Zynga's most important new title for the year, CastleVille, the modest increase in November has to be a disappointment," said analyst Doug Creutz.

"The lack of real DAU growth appears to be partially a function of general overall erosion in the DAU base for Zynga's older titles and partially an acceleration of user churn since the launch of CastleVille."

In the two weeks ahead of the launch of CastleVille Zynga lost 1 million daily active users across 9 games; in the two weeks following the launch that increased to 2.8 million.

The evidence is very strong that Zynga's new releases are simply attracting new users from previous Zynga games, and that few new users are entering the Zynga ecosystem

Doug Creutz, Cowen and Company

"We think the evidence is very strong that Zynga's new title releases are simply attracting new users from previous Zynga games, and that few new users are entering the Zynga ecosystem.

"We also note that the growth windows of Zynga's new titles have been getting shorter and shorter; the October title Mafia Wars peaked just 8 days after its launch, and while CastleVille still appears to be growing, DAU growth was 6 million in week one versus just 900,000 in week two to-date.

"We think Zynga has yet to answer the question of how it intends to grow its business from this point forward, a key question in front of its attempt to launch an IPO," added Creutz.

Discussing Zynga's closest rival on Facebook, Electronic Arts, Cowen & Company noted that its recent launch, The Sims Social, has dropped daily active users from a peak of 11 million in March to an average of 6 million.

"If the game stabilises here, it will still represent a significant success for EA as the only non-Zynga title above 3 million DAUs," offered Creutz.

"However, we do think it is important that EA continues to roll out new content for the game to keep it fresh. EA needs to support Sims Social to give it staying power. Additionally, EA needs to roll out some new Facebook titles soon to capitalize on the installed base of Sims Social."

10 Comments

Andrew Goodchild
Studying development

1,235 396 0.3
Does this data allow for the changes in the way Facebook DAUs are measured, so that you have to log into the game rather than visit the page, or whatever it was that reduced everyone's DAUs?

Posted:2 years ago

#1

Bruce Everiss
Marketing Consultant

1,692 594 0.4
With multiple online SKUs it is very easy for marketing to just be cannibalising users from one product to another.
Also there is the possibility that they have reached the peak of their business model and that further growth will not be cost effective.

It would be fascinating to se their churn figures on a title by title basis!

Posted:2 years ago

#2

Nick Parker
Consultant

280 144 0.5
I expect these figures to be the new measurement Andrew so Cowen & Co should be comparing like for like; we can only hope. I agree with Bruce that there is a concern here that two potential negatives are coming from this. The first is that the Facebook gamer base is reaching saturation point and secondly that cannibalisation of games revenues between games on Facebook is worse than feared (gamers are more fickle or capricious) and certainly worse than on boxed product this quarter where multiple triple A titles seem to be able to stand their ground among all the competition for wallets.

Posted:2 years ago

#3

Neil Young
Programmer

283 331 1.2
The problem with using this as a metric for their success is it's a proxy - if they've maintained DAU whilst increasing user spend, they're doing fine?

Posted:2 years ago

#4

Walter Wong
Manager

1 0 0.0
the base of casual gaming seems reaching the peak to Zynga. If Zynga does not turn to how to make more merchandizing product along with its top social games, its current business model will possibly be hard to go further from now on.

Posted:2 years ago

#5
Maybe now there is also a glut of core games, and real games, the charm of zyngas is less vociferous and thus reflecting a global gaming trend instead?

Posted:2 years ago

#6

Bruce Everiss
Marketing Consultant

1,692 594 0.4
I don't believe that social gaming has peaked. When people look back in 10 years time that will say that just now was only the beginning. 550,000 new Android devices are being registered every single day. Soon many billions of smartphones will be in the hands of people all over the world.
When a smartphone handset costs under $100 it works out at under $4 a month on a three year service agreement. Most people on earth can afford this and many of them are with very high uptake in China, India and across Africa. These are our customers of the future and if we don't learn how to do business with them we will have failed.

Against this the 800 million Facebook users is paltry.

Posted:2 years ago

#7

Alfonso Sexto
Lead Tester

788 596 0.8
I read somewhere, not sure if here or gamespot.com, the sentence "Zinga is the bigest corporative bubble I ever saw". This kind of marketing will not last forever.

Posted:2 years ago

#8
@ bruce - i believe the social games as we know it V1.5 has peaked. The next batleground would be better quality social, casual, action, strategy And core games all around as mobile peripherals , tablets and smartphones acquire the raw processing and computing power of portable consoles

Posted:2 years ago

#9

Robert Aiking
Product Manager

20 4 0.2
Going to have to echo Andrew here.

I sure hope those analysis folks got the memo.
http://www.gamesindustry.biz/articles/20...

Posted:2 years ago

#10

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