Zynga Inc. (NASDAQ:ZNGA) Gives Up On China Efforts, Closes Local Outlet

Zynga Inc. (NASDAQ:ZNGA) lost over $226 million in 2014 and in an effort to revitalize its business has decided to close its Local offices in China.China continues to be a massive hurdle for US game makers to overcome and due to its regulatory and competitive concerns US Company’s continue to fail to penetrate the arena. In their most recent conference call, CEO, Don Matrrick, stated he believes the company has identified the mistakes it has made and is ready to address those issues and move forward. The focus will be on US efforts.

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Mistakes Made

The Zynga Inc. (NASDAQ:ZNGA) discussed how the launch of its new poker product faced serious implementation issues and that the company has not done adequate testing for products across multiple consumer segments. They are also looking to launch a sports brand and they already have the US National Football League and Tiger Woods licensed and ready to go. They released NFL Showdown before the start of last football season but in their haste to reach the market before the season started, released a product that was short on features and paled in comparison to competitor’s apps. There is a strong market of consumers available in the sports segment but launching products before they are ready is a cardinal sin for app makers as the consumer is finicky and has an abundance of other choices.

China Failures

The company launched FarmVillage, its spin-off from the highly-successful Farmville brand, in China but it failed to capture a wide audience and the company decided to downsize its efforts in the marketplace and reduce its footprint in the region. Thus, Zynga China is now a thing of the past. The gaming environment is very competitive in China and with the company barely hanging on in its home-base of the US; it wasn’t a prudent move to start off with.

Technicals

The stock has been hammered and although it has found support at around $2.30, its prospects for appreciation are dim. It’s the victim of poor product releases and bad management expansion decisions. Until it works those out the stock is toxic.

About the Author

Cooper is a graduated from Buffalo State College in New York with a bachelor's degree in Broadcast Journalism.

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