Zynga said today it will shut down four major games as part of its continued effort to lower costs as it reported earnings today.
Chief operations officer David Ko said in a conference call with analysts that the company plans to shut down four once-big games: The Ville, Empires & Allies, Dream Zoo, and Zynga City on Tencent.
“We are moving to shut down lower-performing games,” on top of canceling CityVille 2, The Friend Game, and Party Place in the first quarter, said Ko.
Mark Pincus [above], chief executive of Zynga, also said that Zynga had canceled two major unreleased games during the first quarter. Those games would have led to “better short-term performance,” but they would not have been good for the company in the long run. For the most part, Pincus said 2013 is a transition year for Zynga as it adapts to mobile games and becomes a publisher and platform for third-party games.
Meanwhile, the company has released its big mid-core game, War of the Fallen, which is aimed at hardcore gamers but offers short play sessions on mobile. And Zynga is launching its Draw Something 2 game today.
Draw Something 2 is an especially important game for Zynga. When the publisher acquired Draw Something developer OMGPOP in early 2012, the game has over 13 million daily active users. As of April 2, it is now down to over 1 million DAUs. Figuring out how to retain players could be a significant issue for Zynga should a similar drop occur with the sequel.
Zynga is also in the testing stages on a new endless runner game, Running with Friends, which is a more social version of the endless running genre that includes games like Temple Run.
The embattled social-game publisher reported better-than-expected earnings for the first quarter ended March 31 and managed to stay profitable. Zynga’s results are closely watched as a bellwether for digital gaming, since Zynga is a huge player in social games on Facebook and it has a big — and growing — presence in mobile games.
Zynga said it had GAAP net income of $4.1 million, or break-even results per share, compared to a loss of $85 million, or 12 cents a share a year ago. Non GAAP net income was $9.1 million, or 1 cent a share, compared with non-GAAP net income of $47 million, or 6 cents a share, a year ago. Revenues were $263.5 million, compared with $320.9 million on a GAAP basis a year ago. Non-GAAP bookings were $229.8 million, compared with $329.1 million a year ago.
Analysts were expecting the company to report a loss of 7 cents a share on bookings of $209 million. Still, Zynga’s stock is tanking in after-hours trading, down 11 percent at the moment, erasing much of the run-up the stock had in the closing of today’s trading. The stock may be down since all of Zynga’s core metrics are down in the first quarter compared to the fourth quarter.
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