Zynga slashes 2012 forecast by $100m

Troubled social gaming firm Zynga has slashed its 2012 forecast for the second time due to user flight from its Facebook games and the writeoff of an acquisition.

The company has lost 75 per cent of its market value since it went public in December last year.

The cloud gaming developer, famous for Facebook games such as CityVille and FarmVille, has been beset by problems in recent months, with the departure of its COO, chief creative officer, VP of studios and VP of marketing, and a court case with Electronic Arts.

The company had previously been hailed as part of a new generation of hot consumer internet companies. However, users are increasingly leaving its formerly popular games, while delays in the development of new games have hampered growth. The company has also failed to capitalise on the growing trend for accessing the internet via mobile devices.

"We're addressing these near-term challenges by targeted cost reductions and focusing our new game pipeline to reflect our strategic priorities. At the same time, we are continuing to invest in our mobile business," CEO Mark Pincus wrote in a memo to Zynga’s staff.

The latest developments are also bad news for Facebook, which derives ten per cent of its revenue from Zynga. A 22 per cent slump in the value of Zynga’s shares following the announcement was followed by a 1.8 per cent drop in the social network's share value too.

Pincus expressed disappointed at the result, but called on industry watchers not to lose sight of the bigger picture. “The world is playing games, and is increasingly choosing social games,” he said.