Zynga, the maker of Farmville, looked set to usher in a new era of more casual games that people could play on Facebook. At its IPO Zynga sold for $10 a share. Now it’s trading at less than a quarter of that. What happened? Josh Constine reported:

• Zynga used to advertize its games by buying ads on Facebook. But ads on Facebook have become more expensive making it difficult for Zynga to promote as much as it used to.
• At the same time Facebook users got tired of all the notifications that Zynga’s games sent out, even to non-players. Eventually Facebook stepped in and rebalanced things so that these notifications weren’t as intrusive; making it even more difficult for Zynga to advertize.
• Facebook got smarter. Now Facebook takes a 30% tax on every game that makes money of off the social network, cutting into Zynga’s revenue.
• Screens got smaller. More and more people are accessing Facebook through mobile devices and games are not optimized for this.

Read more about financial factors that have played a role, the cost of acquisitions, and what Zynga needs to do, over here.

Source: TechCrunch