THE COMPANY behind Facebook games such as Farmville last night announced a share buyback plan and provided more details about an ambitious turnaround programme that may go some way towards placating furious investors.
Zynga beat analysts’ low expectations to announce a small increase in revenue to $317m (£198m) for the third quarter, producing a net loss of $52m.
The social gaming company also announced a $200m share buyback and said it has begun a cost reduction plan to save $15-20m a year.
Zynga has struggled to keep hold of users as fans of its web-based games spend increasing amounts of time on their mobile devices.
As a result in-game payments for virtual goods – such as a new recipe in ChefVille or a power-up in arcade game Bubble Safari – dropped to $256m between June and September.
In response, yesterday it announced plans to open up a new revenue stream in the form of real-money online gambling in the UK as part of a deal with the British firm bwin.party.
This follows Tuesday’s announcement that the firm will cut five per cent of its workforce, stop supporting 13 older games and consider closing some studios, including its UK operation based in Farnham, Surrey.
Zynga shareholders have suffered since last December’s IPO, which launched at $10 a share, valuing the firm at $7bn. Yesterday its shares closed at just $2.13 and – although the results pushed this up by 13 per cent in after-hours trading – the firm has lost three-quarters of its market value in the last 10 months.
Zynga is heavily reliant on its relationship with Facebook but there have been hints that this is not healthy. On Tuesday Mark Zuckerberg, the social network’s chief executive, told reporters that “payments revenue from Zynga decreased by 20 per cent this quarter compared to last year”.