[jessedhillon]

To the extent that anyone said the same thing about Nintendo, which I assume is what your intent was, they were wrong and Nintendo had the sales and profits to refute such a claim.

In my opinion the trouble with Zynga is that it's a game company which doesn't make games, it makes loops of engagement tricks culminating with calls-to-action for buying virtual widgets. And then make those people who play their games look like idiots by spamming their friends. The kind of people who were engaged by this were the lowest common denominator of the gaming market, but have either become too sophisticated or too jaded for Zynga's tactics. Additionally, Facebook is choking Zynga's main channel, I'm guessing because aforementioned tactics were so pervasive and repugnant that they were ruining the Facebook UX.

Given the above speculation, Zynga would have to either try to double/triple/quadruple down on monetizing cheap engagement loops, or try making and selling real games that deliver actual value (insofar as any game delivers value).

[wpietri]

Unfortunately, I think they're damned either way.

Making things that are actually fun is hard, and selling them is harder. Even if they succeed, they'll have a brutal transition period while they learn new skills and build a new market.

But the alternative looks no better. As you say, the well of credulous idiots is running dry. I haven't done any user tests lately, but a year ago our subjects were incredibly suspicious of any Facebook auth dialog. If you asked them why, it was clear that everybody had been burned, and Facebook had become too important a social context to end up looking like a fool.

The only upside I see is that we have a good reminder that that "you can fool some of the people all of the time" is not actually a good entrepreneurial strategy. Even if a hype bubble does get you to IPO.