Zynga loses nearly half its daily users, says it's time for a 'reset'

More volatility is expected over the next year, CEO Don Mattrick said

Zynga will get "back to basics" and take a "longer term view" of its business after reporting that its user base has declined by almost a half in the past year.

The social games company had 39 million daily active users in the quarter ended June 30, down 45 percent from 72 million at the same time last year, it disclosed in its earnings report Thursday.

Zynga also said it would scrap a plan to offer real money games, such as casino games, in the U.S. It will continue to evaluate those games in the U.K., though its focus is on social games that are free to play.

Revenue for Zynga's second quarter declined 31 percent from a year earlier, to US$231 million. Its net loss was $15.8 million, an improvement on a loss of $22.8 million in the second quarter last year.

"We need to get back to basics and take a longer term view on our products and business," CEO Don Mattrick said in a statement, adding that the company has "hard work" in front of it.

"As we reset, we expect to see more volatility in our business than we would like over the next two to four quarters," he said.

Zynga's monthly active users fell sharply, too, from 306 million last year to 187 million during the quarter, it said.

Zynga has struggled to maintain its early growth and expand its user base. The company's games have historically been tied to Facebook's platform, but in March Zynga made changes to let users create their own accounts on Zynga.com instead of requiring them to log in through Facebook. The Zynga.com site now has 4.2 million monthly active users, the company said Thursday.

Zynga's flagship titles include "Farmville" and "Words with Friends." Zynga pulled the plug on other games such as "The Ville" and "Dream Zoo" in April.

In June, the company said it would lay off about 520 employees, or 18 percent of its workforce, and close certain offices to reduce its costs.

Mattrick, who formerly headed Microsoft's Xbox business, replaced Mark Pincus as Zynga's CEO in early July. Pincus continues to serve as chairman of the board and chief product officer.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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Zach Miners

IDG News Service
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