[alizaki]

I think this misses the point entirely. Zynga is not failing because their products are cheap to recreate. Plenty of companies, in tech and beyond, have easily recreatable products but do just fine. Zynga is "failing" (if you can call it that) because they depended on cheap user traffic from Facebook - both through free virality and later cheap ad buys. Facebook is maturing as a business and ad prices are going up. And Facebook realized that all that game spam was just not worth the 30% vig they charged (probably the hard way - through testing for user engagement). Take away those temporary advantages and Zynga is just like any other gaming company.

This is a right sizing of the company and its revenues to reflect the games they own, once you take away the cheap/free traffic.

[mattmaroon]

I don't know that it's so much Facebook ad prices going up (they haven't gone up much really) as it is Zynga having burned through all of the potential cow clickers. When you run a Facebook ad, the price per user increases as you saturate the market, even if the overall network's prices remain steady, due to clickthroughs dropping.

Zynga games are typically low-RPU, mass appeal, which as you mentioned relies on cheap traffic (mostly from other Zynga games.) You can only keep shuffling people internally from one game to another for so long until they all leave for Candy Crush Saga.

[alizaki]

You're probably right, FB prices went up for Zynga more so than others because they saturated their market (which just took longer cause it was bigger). However, anecdotally, I've seen FB prices rise 25 - 35% over the last 18 months.