Zynga buys more studios as analyst concerns grow

Zynga buys more studios as analyst concerns grow

By Rob Crossley

January 19th 2012 at 11:24AM

Hidden Chronicles and Scramble With Friends fail to match previous success, analyst says

Social games giant Zynga has announced four recent studio acquisitions as the company lays foundations for future growth, but one analyst has raised concerns over recent performance.

David Ko, Zynga’s director of mobile game operations, revealed to Reuters that the company bought German studio Gamedoctors in December, after acquiring US studios Page44 Studios, HipLogic and Astro Ape Studios.

But two of the firm’s most recent releases, Hidden Chronicles and Scramble With Friends, are said to not be at the same level of popularity as previous releases.

The daily active user (DAU) number for Hidden Chronicles, twelve days since release, is about 710,000 – well below the 5 million acclimated by Empires and Allies and Castleville in the same time period.

Meanwhile, the iOS title Scramble With Friends has failed to penetrate the Top 20 barrier on the App Store.

"The quarterly rate of DAU decline for Zynga's titles that are at least three months old has averaged 18.4 per cent per quarter for the last two years," said Doug Creutz, an analyst at Cowen and Company.

"Assuming Zynga averages a 20 percent quarterly rate of decline for titles beyond their launch windows in 2012, the company must add 9-10 million DAUs per quarter from new games just to keep total DAUs constant."

On Wednesday, Zynga closed on Wall Street at $8.65 per share, a significant fall from $9.26 as trading opened. The San Franciscan group went public in December last year at $10 a share.