Zynga Growth Slows

A new analytical report found Zynga, a social gaming company, is having a difficult time growing its user base and new products released by the company are reaching peak player numbers too early.

Zynga is a game developer that found much success distributing its games through the social networking site Facebook. Popular games from Zynga include a version of Poker, Farmville and Mafia Wars.

The company has lost 700,000 daily active users in the last five weeks, bringing the number of DAUs down to 46.9 million. In February of 2010, the service attracted about 70 million DAUs. The report was released by Doug Creutz and Jason Mueller from the Cowen and Company analyst group. It states even though Zynga has a fairly large user base it's having a difficult time driving user growth recently.

Also newly launched titles such as CityVille, Empires & Allies and Café World, are already seeing number peaks, while much older games are still losing players. The report states the company has seen almost no growth in DAUs since October of 2009.

Yet other social games have seen deciles as well. Electronic Arts lost 3.5 million DAUs in the last five weeks to 14.6 million users. The EA game Sims Social has 8 million DAUs. Disney's Playdom has 4.3 million users, dropping half a million DAUs in a five week span.

This may hurt Zynga's initial public offering, which is set to begin Nov. 17. The company is hoping to raise $1 billion from investors. The company was set to begin the IPO in September but was skittish due to an unstable stock market. The company has proved to be quite profitable making a profit of $90.6 million in 2010 and $11.8 million in the first three months of 2011.

Despite Zynga losing users since 2009, the company has been able to grow profits by increasing its monetization strategies, the Cowen report said. The company makes a bulk of its profits by allowing customers to convert real money into in-game currency. That currency then can be used to purchase in-game items that speed up player progression or are simply decorative.

The company is also trying to cut the cord with Facebook, who takes a cut of anything sold through its Web site. Zynga seeks to launch Project Z, a gaming platform independent of any social gaming network. However, users will still need a Facebook account to get a ZTag, the name of users' Zynga's accounts. No word when the service will launch, but antsy users can reserve a ZTag name on Zynga.com.