What was the first thing you did when you received your first smartphone? Make a call? Send a text? Well, I went straight to the app store and downloaded as many applications as my phone’s memory could hold.
These new functions were the primary reason I was excited to upgrade from my Stone-Aged flip phone to a futuristic, button-free device. Much like the way Windows revolutionized the computer, these apps have changed the way we use our phones and for what we use them.
Zynga, the company that brought us “Words with Friends” and “FarmVille,” among other social games, has been one of the most successful app-developing companies in the world. But will they be able to continue to manage in this newly formed market?
The evidence suggests no. But first, let us look at the world of apps in a different way than you most likely would when pressing “download.”
Over just a few years, the app market has exploded. Appchamp.com estimates there are roughly 400,000 apps for Android and 700,000 apps for Apple products on the market, with those numbers growing daily.
The mechanics behind this market are intriguing. The most interesting aspect is that anyone can produce an application. All that is truly needed is the knowledge of coding to develop the app in the first place. As far as what the app does and why and how it does it, that is all at the developer’s discretion.
After going through a review process by Android and Apple, respectively, to make sure the app is not offensive or of a derogatory nature, the application is placed on the market and is available for download.
The phrase “there’s an app for that” has taken on a sarcastic, yet truthful connotation. This is due to seemingly infinite amounts of apps designed for the most obscure tasks that usually inspire the question, “Why does this exist?” However, most are still incredibly helpful in day-to-day life.
So what does this all mean for Zynga, specifically?
The app-based company has experienced public hardships over the past couple weeks as their quarterly numbers have not met expectations.
Their underperformance warranted a statement from CEO Mark Pincus: “The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction.”
The company’s stock price fell a drastic 20 percent after Pincus made the announcement, totaling a recession in stock price of about 75 percent over the past year.
Zynga is in serious trouble, not just because they are experiencing a disappointing quarter, but because there does not seem to be a high potential for improvement in the future.
As I mentioned earlier, just about anyone can create and submit an app. There is virtually no barrier to enter this market, due to a relatively miniscule amount of necessary startup capital and virtually no regulation.
This presents an unlimited amount of competition, making the market a highly volatile environment. All it takes is one revolutionary idea — as simple as “Words with Friends” — and you have a success story.
Still, this is by no means a death sentence for Zynga. In order to revive its business, the company must create a game that is attractive, fun and unlocks the full potential of our smartphones. However, a continuous stream of these games would be essential to retain users’ attention. After all, how often do you still play “Words with Friends” or “FarmVille?”
According to “Wall Street Journal,” the full results of Zynga’s performance this quarter will be released October 24, but we already know it will not be pretty. Company executives and staff must make a genuine effort to adapt and perform, as this ever-growing and ever-changing market threatens to swallow them whole.