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With Zynga Faltering, Is Social Gaming Business Sustainable?

With Zynga faltering, is the social gaming business sustainable? Published: 7/26/2012

The social gaming industry is relatively new, which makes it harder to understand for business owners in the industry. An example of how the market can be quite volatile is the recent fall of Zynga stock, which plunged 40 percent.

These results leave many to ask the question, "Is social gaming simply a fad? Or is it sustainable with many profitable years to come?" Experts seem to be split on the issue, reported CNN.

Needham & Co. analyst Sean McGowan insisted that this is definitely not just a fad, as digital and online gaming have been in existence for over three decades. Instead, he said, Zynga’s problem is that they had enjoyed so much growth that there was simply nowhere else they could go except downwards.

While McGowan believes in the power of social gaming, Rich Greenfield, an analyst for BTIG, recently composed a note titled, "Downgrading Zynga to Neutral: We Are Sorry and Embarrassed by Our Mistake," in which he discussed how his firm is beginning to see Zynga in a negative light.

The future remains unclear for Zynga and other similar firms, and because of the cloud of doubt surrounding social gaming, companies should consider business insurance policies in case they are sued by investors.

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