The Better Mousetrap

Zynga’s Fall From Grace

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Farmville, Mafia Wars and Dream Heights are just a few of the successes social gaming powerhouse Zynga has produced.  With success, controversy is never far behind.  No stranger to controversy Zynga has been sued for patent infringement and accused of cloning competitors games by the developers of  Tiny Tower.  These past events pale in contrast of current events surrounding Zynga’s all time low stock price and reports of insider trading.  This is also on the heels of John Schappert no longer overseeing game development at Zynga.  John Schapperthas has not been let go, but no longer has influence over Zynga products.  All teams are now reporting directly to CEO Mark Pincus.  This could be a sign of Zynga moving to a mobile market place since they have not had the same success as seen on Facebook.

Zynga has many new challenges to over come if they wish to climb back to the top.  Recent allegations over Pincus and other Zynga insiders sold off their stock before the stock crashed.  The story doesn’t stop there though.

“Yahoo News found that Zynga worked with their other partners to alert investors to the imminent implosion and told them to cash out.”

  • Marc Pincus, Zynga’s CEO, sold 16.5 million shares for $200 million
  • Institutional Venture Partners, a Zynga investor, sold 5.8 million shares for $70 million
  • Union Square Ventures, a Zynga investor, sold 5.2 million shares for $62 million
  • Google, a Zynga investor, sold 4 million shares for $48 million
  • SilverLake Partners, a Zynga investor, sold 4 million shares for $48 million
  • Reid Hoffman, a Zynga investor, sold 688,000 shares for $8.2 million
  • David Wehner, Zynga’s CFO, sold 386,000 shares for $4.6 million
  • John Schappert, Zynga’s COO, sold 322,000 shares for $3.9 million
  • Reginald Davis, Zynga’s General Counsel, sold 315,000 shares for $3.8 million

Zynga maybe down but not out.  The casual gaming market is changing, Zynga will have to adapt and change like the rest of us.  Embracing the mobile market and creating cross platforms between the web and mobile devices will be a good start.

About V. Sterling