Zynga’s revenues for the first quarter of 2013 declined 18% year-over-year to $264 million as the company is in the midst of doing a big pivot onto mobile platforms. Last year, during the same quarter, Zynga earned $321 million in revenue.

Analysts had estimated on average that the company would pull in $209.8 million in revenue and lose 4 cents a share. The quarter had net income of $4 million million and shares are down 13 percent in after-hours trading.

In the earnings release, CEO Mark Pincus said:

We are encouraged by the strong execution from our teams and the breakout hit performance of FarmVille 2, which captures the imagination of nearly 40 million players every month. 2013 will continue to be a transition year as we face the challenging environment on the web and invest in developing the leading franchises and network across web and mobile platforms and offer our 253 million monthly players a connected experience that can follow them from work to school to home and anywhere in between.

The tough cuts and studio closures of last year are largely over, and Zynga’s shares have climbed 35 percent since the beginning of the year.

Now the company is looking ahead to a couple potential growth areas: 1) mobile games 2) midcore games 3) third-party publishing and 4) real-money gaming.

On mobile platforms, which is the huge growth area for the industry, Zynga has a couple of reliable franchises like Poker, which is currently ranked #15 on the top-grossing charts in the U.S. It also has the “With Friends” line-up which has top-grosser Scramble With Friends and the newly-launched Running With Friends, which could be compared to Imangi’s Temple Run or Kiloo’s Subway Surfers. They’ve also pumped up the release of the Draw Something sequel too.

But Zynga’s performance has paled in comparison to old rivals like the U.K.’s King or Finland’s Supercell, which is the industry’s darling of the moment. With just 100 employees, that Helsinki-based company made nearly as much as Zynga did in the same quarter with $179 million in revenue.

On the real-money gaming side, Zynga only recently made its debut after the quarter ended with the launch of two titles in the U.K. market. So we won’t see the performance of any of those titles until the next earnings announcement.

In terms of user growth, Zynga saw 52 million daily active users last quarter, a slight decrease from 65 million during the same period last year. It also saw 253 million monthly active users, down 13 percent year-over-year from 292 million users.

Article courtesy of TechCrunch

The big winners in the three-month period ending in February in terms of smartphone share globally and in the U.S. were Android and Windows Phone, according to Kantar Worldpanel, with BlackBerry experiencing significant declines in consumer interest and iOS remaining fairly level in most markets. The bad news for BlackBerry is that it saw its smartphone OS share decline even in the U.K., where it launched BB10 and its new hardware at the end of January.

Windows Phone isn’t really posing a threat to iOS or Android, which continue to dominate smartphone share is all markets, but it is starting to pull away from BlackBerry and Symbian when it comes to making a strong showing as a third place contender. In the U.S., Windows accounted for 4.1 percent of smartphone sales in the three-month period ending February 2013, up from 2.7 percent for the year-ago quarter. BlackBerry, by contrast, represented only 0.7 percent of smartphone sales in the U.S. according to Kantar, down from 3.6 percent during the same time in 2012.

In the U.K., BlackBerry slid from 16.8 percent of all smartphone sales in the three-month period ending in February last year, to just 5.1 percent of sales for the same span in 2013. That’s a drop of 11.u7 percentage points, during a period that included a full month of BB10 device sales. BlackBerry itself claimed 1 million devices shipped for its most recent fiscal quarter, which included BB10 launches in Canada and the U.K., but when pressed about how much of that represented actual sales, execs hedged and noted that it was “sort of” closer to between two-thirds and three-quarters of that 1 million figure on its investor conference call.

Android’s performance has likewise been strong, with big increases in many markets, including Great Britain, Germany, and Mexico. And while iOS remains relatively stable, with either small slides or gains across the board, it isn’t losing significant ground to the competition in any market: Android is eating space given up by legacy players like Symbian, which in most cases is dropping share quicker than BlackBerry. BlackBerry has the most to lose, however, since Symbian is no longer being actively developed. We’ll see if the gradual worldwide rollout of BB10 can reverse some of the losses being reported by Kantar in the coming months.

Article courtesy of TechCrunch

Somewhere, there is a very sad music lobby analyst shedding a tear. “The vast majority of the music that is consumed illegally by the individuals in our sample would not have been legally purchased if illegal downloading websites were not available to them,” reads a European Commission study on the impact of music piracy. Unlike previous research studies into whether piracy cannibalizes sales of physical music, the commission’s cross-country study looked at sales of digital music (i.e. iTunes) and found that pirates have a negligible effect on the music industry.

Previous research has attempted to quantify the impact of piracy by looking at sales of physical music. For instance, the report notes, countries with higher levels of piracy have, on average, lower music sales. Of course, this sort of brute-force correlation can’t control for all the millions of reasons a country may have higher piracy and lower sales, even if there’s no causal relationship between the two.

One method economists use to tame the statistical beast of between-country studies is “exogenous shocks.” France, for instance, enacted a super-tough anti-piracy law, HADOPI, which gave economists a nice “shock” to study whether French residents are less likely to pirate music than their European peers, during the same period after authorities started using the law to threaten downloaders. Danaher et al. found the law worked, and music sales rose 22.5 percent, which is more than other European nations.

Still, the shocks method only works if there is only one shock at a time. French newspaper Le Monde rained on the HADOPI parade by arguing that the rise in music sales was actually due to the release of the new iPhone, which was concurrently released during the enforcement of the new law.

This latest research by the commission tracked individual web-browsing habits from users who had been paid to let Nielsen track their online behavior. Visiting websites for pirating music had little impact on whether users also visited websites for legal music downloads.

“Taken at face value, our findings indicate that digital music piracy does not displace legal music purchases in digital format. This means that although there is trespassing of private property rights (copyrights), there is unlikely to be much harm done on digital music revenues,” concludes the report.

Music industry representatives offered a predictably outraged rebuttle. Buried within the counter report is a nugget of a good argument: “It is not news that some pirates are also legal buyers.” In other words, we still don’t know how many of those visits to legal music websites would have occurred had there been no illegal alternative.

We may never be able to accurately quantify the impact of music piracy. Either way, instead of attacking consumers, it might behoove the music industry to follow Apple’s lead and concentrate on finding novel ways to satisfy our appetite for high-quality and accessible legal music.

Article courtesy of TechCrunch

Average costs per click for Facebook ads reached record lows in the U.S. and decreased across other regions in the fourth quarter of 2012, according to data from third-party ad company TBG Digital.

TBG attributes this to the rise of News Feed ads on desktop and mobile, that have lower CPCs than sidebar ads. In the U.S., where advertisers are adopting this format more quickly, CPCs decreased by 37 percent in Q4, and that’s on top of a 40 percent decrease in Q3. CPCs in the U.S. are now lower than those in Canada, France, Germany and the U.K.

 The downward trend of CPCs is directly related to the upward trends of clickthrough rates. The prominent placement of ads in the desktop and mobile feed makes them more effective in generating clicks, so Facebook can earn more per impression while charging advertisers less per click. CTR increased by 25 percent in the U.S. between Q3 and Q4 last year, and 157 percent since Q4 2011.

These stats are based on 397 billion ad impressions served in the U.S., U.K., Canada, France and Germany from January 2011 to December 2012 for TBG Digital clients.

In its quarterly report issued today, TBG also shared its perspective on the Facebook Exchange. The company says FBX retargeting ads for a personal finance brand delivered 48 percent post-click conversion rates and 32 percent better application accept rates than other Facebook advertising that ran during the same period. A computer and electronics brand saw 130 percent lower costs per sale, and a telecommunications company found 33 percent better cost-to-connect rates with FBX versus other Facebook advertising. TBG noted that the combination of standard Facebook and FBX ads can deliver up to 2.6 times better ROI than a traditional Facebook campaign alone.

Article courtesy of Inside Facebook

Zynga’s revenue was flat year-over-year amid a tough fourth quarter that saw layoffs and a continuing series of executive and mid-level departures.

The company’s revenue came in at $311 million and the net loss was $48.6 million for the quarter, with non-GAAP earnings at 1 cent per share. Analysts had estimated that Zynga’s fourth-quarter revenue would come in at $212.1 million with a loss of 3 cents per share. Bookings were down 15 percent year-over-year, to $261 million.

“The biggest highlight of the quarter was seeing our team deliver a successful sequel in FarmVille2, a next generation social game that offers cutting edge 3-D experiences loved by millions of FarmVille fans,” said founder and CEO Mark Pincus in the earnings press release. “In 2013 we’re excited to bring this new class of social games to mobile phones and tablets and build a network that offers an easier, better way for people to play together.”

The release includes engagement numbers across Zynga’s titles (not FarmVille specifically). The company saw 56 million daily active users last quarter, a slight increase from 54 million during the same period last year, but down from 60 million last quarter. It also saw 298 million monthly active users, up 24 percent year-over-year but down 4 percent from the last quarter.

For all of 2012, Zynga is reporting revenue of $1.28 billion (up 12 percent) and a net loss of $209 million.

A year ago, Zynga’s fourth-quarter revenue came in at $311.2 million. But over the past year, Zynga’s network on Facebook has bled users while other casual game developers like King.com have risen in the rankings. At the same time, while the company has transitioned to mobile platforms and probably has the largest network of players on Android and iOS, it hasn’t been fast enough to compensate for a tougher environment on the Facebook platform.

Zynga engaged in significant cost-cutting measures this quarter to bring the company back to the brink of profitability. It closed more than 10 titles, had layoffs in its Austin office, and closed the Boston and Tokyo offices. The company has also seen more senior-level departures in the past few months, including Treasurer Mike Gupta and chief game designer Brian Reynolds.

But perhaps the very worst of the news has already been priced in. At a market capitalization of $2.1 billion, Zynga has an enterprise value of roughly $450 million over the $1.65 billion they have in cash, short-term, and long-term investments.

Despite the negative flow of news, shares rallied as much as 6 percent this morning on hopes of a surprise from a strong FarmVille 2 performance. Zynga recently said the game was seeing 8 million players per day. As of 4:32pm Eastern, Zynga is up 5.84 percent in after-hours trading.

In the release, COO David Ko describes 2013 as “a pivotal transition year” for the company: “We are focused on achieving three strategic objectives: growing our franchises on mobile and web, expanding our network and maintaining profitability on an adjusted EBITDA basis.”

Article courtesy of TechCrunch

The iPhone was Verizon’s top-performing smartphone during its most recent quarter, the company revealed during its quarterly earnings call today. All told, Apple’s smartphone made up 63 percent of Verizon’s smartphone device sales for the quarter, with 6.2 million sales out of a total of 9.8 million for smartphone hardware. Of the 6.2 million iPhones sold, Verizon CFO Fran Shammo said that half were 4G-capable, which means they were iPhone 5 handsets.

Compared to the previous quarter, iPhone sales were up considerably, which makes sense given that this reporting period covers the holiday season. In Q3 2012, Verizon sold 3.1 million iPhones out of 6.8 million total devices sold, or just over 45 percent. iPhones therefore accounted for a greater percentage of Verizon’s smartphone sales during the period, and it’s likely the iPhone 5 that gave sales of Apple devices on the network their biggest boost, since they accounted for just 31 percent of total iPhone sales in Q3, vs. around 50 percent this quarter. They were only available for part of Q3, however, but could be ordered by customers for the entirety of Q4.

Unfortunately, there’s no real way to break out how the iPhone 5′s performance compares to the iPhone 4S’ performance during the same period last year. Verizon definitely sold a greater number of iPhones during Q4 2013 than in Q4 2012, when it sold 4.2 million devices, and Apple took a larger percentage of total smartphone sales. But since at the time there was no way to distinguish between iPhone 4S and earlier models that Verizon offered (vs. now, when they break out “4G-capable” and others), we can’t get an idea of how many customers were picking up older devices last year.

Still, we can see that demand for Apple’s iPhone is still very strong in the U.S. market, stronger than it has ever been based on Verizon uptake at least. That’s an interesting data point to consider, given all the talk of weakening supply-side orders that has been cropping up lately.

Article courtesy of TechCrunch

I have mixed feelings about Square Enix gradually re-releasing all of its titles for iPhone and iPad devices; on the one hand, these are generally great titles that I really enjoy playing again. But at the same time, I’ve bought many of them over and over, and will probably do so again on Android somewhere down the line. In the greater balance of things, though, news of a Final Fantasy IV iOS release, set for December 20 with a $20 price tag, warms the cockles of my heart.

Final Fantasy IV (originally the second in the series here in the west) made its original debut back in 1991, for the Super Nintendo. It got a remake in 2008 for Nintendo DS, with updated 3D graphics, at which time I bought it again. I also have it as part of the PSP Final Fantasy IV complete collection, and on Nintendo’s Wii Virtual Console. I managed to avoid picking it up for the Game Boy Advance by some miracle. Final Fantasy IV is often lauded as among the best in the series, thanks to awesome storytelling and gameplay mechanics that helped shape and define the future of the RPG genre, and it’s definitely a game that stands the test of time.

The fact that it’s the 3D version of the game that will appear on mobile platforms (including Android at a later date sometime in early 2013) may disappoint some users who were hoping for the updated, but still 2D retro look of the PSP collection version. Also, pricing of $20, while in keeping with Square Enix’s mobile platform pricing, could be hard to swallow for users used to picking up Angry Birds-esque casual fare for $2 or less. But Square Enix’s announcement also comes with good new for the flinty: its other existing titles are on sale from early December through the new year.

Final Fantasy I and II on iOS and Android get price reductions from $8.99 to $3.99 for one week from Dec. 7- 14, and Final Fantasy III is nearly half price on iPhone and iPad, at $8.99 and $9.99 respectively during the same period. Final Fantasy Dimensions is $16.99, from the normally very high $28.99, and other titles are also on sale from Dec. 12 through January 7. If you were waiting to jump on board the Final Fantasy mobile nostalgia train, but balked at Square Enix’s relatively high prices, now is the time to snag these, because the company is fairly reserved when it comes to sales and discounts.

Article courtesy of TechCrunch

Proof, if proof were needed, that the apps gold-rush has resulted in the majority of the riches being concentrated in a few developers’ hands: analyst house Canalys says just 25 developers accounted for half of app revenue on the two dominant U.S. app stores, Apple’s App Store and Google’s Play, over a 20-day period last month.

The finding is an estimate based on Canalys’ daily App Interrogator surveys, and refers to revenue generated in the U.S. in these stores during the first 20 days of November. Between them, the 25 developers accrued $60 million from paid-for downloads and in-app purchases over this period, according to the analyst. All the top-grossing developers — bar one — are games developers. The exception is the Pandora music streaming service with its Pandora Radio app. Games developers in the list include Zynga, Electronic Arts, Disney, Kabam, Rovio, Glu, Gameloft and Storm8’s TeamLava — with Canalys going on to note:

During the same period, games accounted for 145 on average of the top 300 paid apps in the Apple App Store and 116 of Google Play’s top 300 paid apps. Games also accounted for 94 of the top 300 listed free apps for Apple and 110 for Google Play.

It follows that developers not making games have an uphill battle to get their wares noticed and monetized. “Discoverability is a particular issue in the Apple App Store and in Google Play given the huge inventories they boast,” noted Canalys Senior Analyst Tim Shepherd in a statement. “With top game developers’ content so prevalent in the stores, it can be hard for other good quality apps to get the attention they deserve. Developers of other kinds of apps need to consider how to promote them. Depending on the type of app, they should consider how best they can exploit social media and social recommendations, tactical sales promotions and discounts, branding tie-ups and targeted in-app advertising.”

If there are any lessons here for striking it lucky by making money with games apps, successful game developers “almost invariably have multiple titles generating revenue,” says Canalys — so, in other words, don’t put your (Angry Birds) eggs in one basket. The analyst notes that Zynga had 15 titles in the list of top 300 grossing iPhone apps “on average” in Apple’s App Store every day, and nine titles in the equivalent list in Google Play. Even Angry Birds’ maker Rovio had “multiple game variants” in the list.

As for games developers who aren’t on the list for November — there’s more bad news ahead: the analyst expects many of the top 25 developers to consolidate their dominant position over the holiday season by “employing discounts and special offers, taking advantage of their ability to cross-promote within their app portfolios.”

“This is expected to ensure that over the Christmas period in the US, the dominance of key game developers will only increase,” added Canalys VP and Principal Analyst, Chris Jones, in a statement.

A recent report by analyst ABI Research predicts that cumulative global app revenues will exceed $30 billion by the end of the year.

Article courtesy of TechCrunch

For the first time in the history of comScore’s MobiLens U.S. mobile market share report, Apple has come in second overall among handset OEMs. Apple grew its U.S. market share by 1.5 percentage points from 16.3 to 17.8 percent in the three-month period ending October 2012, according to the report. During the same period, Samsung also saw its share grow, but only by 0.7 percentage points, from 25.6 to 26.3 percent. Apple seems to have begun narrowing the gap on the back of the iPhone 5, which went on sale in the U.S. towards the middle of the period covered by comScore’s latest report.

Apple climbed to second over LG, which saw a dip of 0.8 percentage points from 18.4 to 17.6 percent during the period. Motorola and HTC rounded out the top five, both experiencing slight drops and finishing the quarter with 11 and 6 percent of the market, respectively. Another key metric comScore found, and one which helps explain what finally pushed Apple into second place, is nearly 52 percent of all subscribers in the U.S. were on smartphones, up 6 percent from the previous quarter. Apple only sells smartphones, so its fortunes rising in lockstep with the decreasing popularity of feature phones makes perfect sense.

As mentioned, Apple also released the iPhone 5 during the quarter covered by this report. We’ve already seen from Kantar Worldpanel that the iPhone 5 propelled Apple back to the top of the U.S. smartphone charts, and it’s likely that device is also the reason Apple now comes in at number two overall among handset makers of all stripes.

Platform market share still shows Google with a commanding lead, and one which grew during the period, from 52.2 percent of subscribers to 53.6 percent. Apple also gained, rising 0.9 percentage points from 33.4 percent to 34.3 percent, while RIM was the biggest loser among the top five with a decline of 1.7 percentage points. Microsoft and Symbian round out the top five, both with minor drops in overall share.

The next quarter will be an interesting one to watch for. It covers November through January, which means that we’ll see the holiday effect on all OEMs. It also should include LG’s sales of the Nexus 4 device, which seems to be remarkably popular, or at least in very short supply. Depending on how LG allocates supply among its Optimus G and Nexus devices, we could see it claw back into second, since the gap is still quite narrow, but it has to contend with Apple’s holiday iPhone sales, which are generally very strong.

Article courtesy of TechCrunch

Design-focused e-commerce site Fab released a number of data this morning, and it’s impressive to say the least. Fab has sold more than $6.5 million worth of product this past week, up from $1.7 million during the same period last year. That’s up 300 percent from last year.

Fab also hit an all-time, single-day high of more than $1.3 million in sales on Cyber Monday, November 26. That compares to $350,000 on the same day last year, up more than 3.5 times. That also marks Fab’s first million-dollar day. Average order value was up more than 10 percent from previous weeks.

Fab averaged $933,500 per day during this past week. Mobile has also been huge for the company. Over one-third of sales was via its mobile apps on mobile devices, seeing record logins and purchases on iPad, particularly. And for the first time, iPad and iPhone sales were almost equal. iPad also led all other platforms (vs. web and mobile phone) in terms of number of items per order and overall basket size.

A few other data points: More than 10 percent of every login to Fab resulted in a purchase, and the company sold more than 200,000 unique products.

Fab says that this coming Monday is the official “Cyber Monday” in the United Kingdom, and the company says it will update its numbers soon.

Regardless, the fact that Fab is having its first million-dollar day this holiday season is both a testament to the growth in e-commerce, as well as to the fact that Fab is growing both as a business and a brand.

Article courtesy of TechCrunch