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Hard Times for Zynga

The social gaming developer Zynga is beginning to have problems with the financial community. Last week the first, of what is expected to be many, lawsuit was filed on behalf of investors claiming that Zynga’s executives “knowingly or recklessly” made misleading statements relating to the company’s performance and prospects.

Zynga is facing a number of lawsuits since revising its forecast downwards last week.

The lawsuit follows Zynga’s downward revision of its outlook which led to a 38% drop in share prices. Zynga has said that its revised forecast is due to a “faster decline in existing web games due in part to a more challenging environment on the Facebook web platform.” This comment has led to debate over whether it is just Zynga in decline or the whole gaming genre which has so far been prominent on Facebook.

According to Michael Pachter, a games analyst at Webush Securities, Zynga overestimated the durability of its games CityVille and FarmVille. They had stable revenues for a number of quarters but started to tail off sometime before the launch of Facebook’s App Center in June.

Zynga is also being sued by Electronics Arts for copying elements of The Sims Social in the game The Ville. EA has pointed out numerous game elements which it claims Zynga has mimicked in The Villa such as personality traits and avatars’ actions like talking and dancing. They are also claiming that Zynga has used eight identical colours for the characters skin tone.

Head of EA’s Maxis label, Lucy Bradshaw, has said that “Zynga’s design choices, animations, visual arrangements and character motions and actions have been directly lifted from ‘The Sims Social'” She claims that the two games are “largely indistinguishable” to an observer who doesn’t know them well.

Zynga’s general counsel, Reginald Davis, has said that EA show a “lack of understanding of basic copyright principles”.

OCA News Editor