10:00 AM on 08.01.2012
Farmville creator Zynga is ... buggered. After a few years of living large and sucking as much cash as it could from Facebook users, the proudly "evil" company's bottom is well and truly falling out. Share prices have been falling for the past few weeks, today plummeting to a new low of $2.95.
Taking the fall is former Xbox man and current COO John Schappert, who has been stripped of his authority over Zynga's game business, having to hand the reigns over to David Ko and Steve Chiang.
Oh, but it doesn't end there. The company is also facing a class-action lawsuit, where it's alleged that higher-ups were insider trading. Zynga bigwigs, including CEO Marc Pinkus, are said to have sold over $500 million in stock three months before the crash. Five legal firms are investigating, and "hundreds" of investors may be included in the suit.
This was pretty much bound to happen, really. Zynga poured all of its efforts into exploiting an audience that, at best, has the attention span of a magpies with ADD. While casual gamers are an important demographic, they're not reliable in the long term -- especially Facebook users, who by nature are bored of everything and require constant fresh stimulation.
When all your money is made from optional purchases by faddy consumers ... well, you're asking for trouble.
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