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Online gambling becoming increasingly important to Zynga's prospects
As Zynga's financials continue to look bleaker, yet another employee has decided to look for opportunities elsewhere.
Laurence “Lo” Toney, general manager of Zynga Poker, has left the company, AllThingsD reported Monday.
Toney confirmed the news to AllThingsD with this statement: “My departure is less about Zynga and more about the vast number of opportunities that currently exist in the Valley. I have been approached by several organization to lead teams and companies that I find exciting and compelling. It is the right time for me in my career to move on.”
Toney, who worked at Zynga since 2010, has also reportedly updated his LinkedIn profile to reflect his departure, but I was unable to view it due to privacy restrictions.
Gambling is the future
Zynga has had many executives jumping ship these last few months, but Toney’s departure has large implications for the future of Zynga, since online gambling is the company’s best shot at re-attaining its once mighty stature.
Zynga Poker was the company’s very first game, launched in July 2007, and has remained extremely popular, even as Zynga’s Ville games have lost some of their edge.
Gambling was becoming increasingly important to Zynga, as its once mighty relationship with Facebook began to erode. Zynga’s casual games thrived on Facebook, until the social network began emphasizing new games in its news feed and notifications so that people have a greater level of discovery.
In the first quarter of this year, 15% of Facebook’s total revenue was brought in from Zynga. Of that revenue, around 11% came from the 30% in transaction revenue Facebook takes from Zynga for virtual goods, in addition to direct advertising bought by Zynga. The other 4% came from advertising that was done on Zynga games.
That number was down from 19% the previous quarter, where 12% of Facebook’s revenue came directly from Zynga and 7% came from the revenue generated by ads.
According to JP Morgan analyst Doug Anmuth, Zynga contributed only 13% of Facebook’s total revenue, with 4% coming from Facebook pages generated by Zynga apps.
Pincus even blamed Zynga’s disappointing second quarter numbers on the changes made by Facebook.
To balance the loses it was seeing, it was reported in July that Zynga would begin to allow real-money gambling in markets outside the United States by the beginning of 2013.
“What we’ve said, and what we have to announce today, is that we have our first products in development and that we intend to release them in markets that are regulated and open, subject to our getting licensing,” Pincus said on an analyst conference call discussing Zynga’s second quarter earnings.
“The US is obviously an attractive market, but it’s not an open, regulated environment today.”
Zynga Poker is such an important piece of the company's future that, after Zynga was forced to announce that it was lowering its outlook for the remainder of 2012 last week, due in part to the weakness of its Web games, CEO Mark Pincus sent to a note to employees in which he specifically cited Zynga Poker as one area where the company would be investing heavily.
"The challenges we faced in our Web business in Q2 continued in Q3 and while many of our games achieved plan, we still experienced overall weakness in the invest and express category. To address this we’re further investing in other genres like casino where we already lead with Zynga Poker and blue PVP, a category we pioneered with Mafia Wars, and now have the opportunity to reinvent with the industry’s best talent here at Zynga," Pincus wrote.
Now that Zynga has lost the person in charge of such an integral part of its future, things seem only cloudier now.
Other Zynga departures
Toney follows numerous other executives that have left Zynga this year, including chief security officer Nils Puhlmann and Wilson Kriegel, the chief revenue officer of Omgpop, who both left in September; Chief Operating Officer John Schappert and Chief Creative Officer Mike Verdu, and Alan Patmore, general manager of CityVille, all left in August.
Erik Bethke, general manager of Mafia Wars 2; Ya-Bing Chu, a VP in Zynga’s mobile division; and Jeremy Strauser, a general manager have all left as well.
Zynga could not be reached for comment.
(Image source: https://www.buzzom.com)
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