Sometimes it's hard to see the forest due to all the trees
Zynga had a good trading session today despite the turmoil in Washington. Unfortunately, right on queue, the media jumps in and socks it to Zynga. Bloomberg TV titles their interview “Executive Member Leaves Zynga and Joins Paltalk”. What the title, and the interview, conveniently fails to point out is that Wilson Kriegal left Zynga back in September to head up Paltalk.
If you watch the video, it becomes very apparent that Cory Johnson has no real interest in Wilson Kriegal or Paltalk. The video interview last for 3:53 minutes. What Johnson seems to want more than anything is to get Kriegal to bash Zynga and only leaves him :47 seconds to talk about Paltalk.
Always considered Bloomburg to be above the “tabloid” type reporting. Guess not.
While I’m on my soap box, I would also like to mention the news that came out last week concerning Zynga pulling out of the Japanese market. Reports stated no direct reason for the closure is given but it is likely linked to poor sales for its games in Japan. With Japan’s cutting edge technology and their strong ability to take a kid’s cartoon and turn it into a billion dollar industry, which always includes different online and several different video games (Pokemon, Bakugan Battle Brawlers, and Yu-Gi-Oh! to name a few) is there any wonder why the Japanese market would be a tough nut to crack?
Mark Pincus has not hidden the fact of where he wants to take Zynga, he’s given away his games for long enough. Recognizing the growing interest of online gambling, Pincus is setting up Zynga to make an impact within the sector.
Japan has nothing to offer Zynga in the way of online gambling. Why? Online gambling in Japan is illegal. The Japanese government does not grant licenses to operate internet gambling websites in the country, and it would like to keep Japanese players from accessing and using foreign internet gambling websites as well. Unable to profit in the Japan market and no chance of getting an online gambling licenses, Pincus cut ties and is moving out of Japan. The media failed to report online gambling in Japan is illegal, but went overboard to tell the public Zynga was pulling out of Japan.
Things look great for Zynga in the UK as it has partners with Bwin. As of 12/24, Bwin was trading in the 113 GBP range (that $183 in USD). Please note that Bwin is exclusively an online gambling service and my guess a darn good one if their stock is trading in the $180 pps range.
Online gambling in the US. Nevada does it and New Jersey just voted it in. It’s only a matter of time before other states start to notice the revenue from online gambling and want their piece of the pie. Who’s positioning themselves to assist the states, one of the worst CEO’s of 2012. IMO, we will more partnerships between Zynga and other companies in the Q1 of 2013.
The forest is not obscured by trees. They were clear cut some time ago, precisely when ZNGA launched its fraudulent secondary offering. It has been a steady downward trajectory to Dante's Inferno ever since Pinus and pals cashed out to the tune of $600 million plus. What remains of the once pristine forest is a wasteland, and few creatures can thrive for lack of nourishment. There is nothing but a constant steady erosion of vital soil.
I agree that ZNGA's bottom line is little effected by the closure of the Japan office. What this does illustrate is the power of government to dictate the rules of the playing field when it comes to legal online gambling. A very few enlightened countries will rightfully consider that online gambling addiction targets the underclass, and they want nothing to do with this modern day version of the house of ill repute. The next time you are at the convenience store in California, observe the type of person who will throw down $100- at a time for the state lottery, which has absolutely horrendous odds. By and large, they are not well off. Theirs is a futile attempt to escape dire economics and strike it rich. They might as well throw their few remaining dollars in the fireplace.
The states in America will have no moral scruples about online gambling. It, like their state lotteries, will be actively promoted as harmless entertainment. However, almost every state in our nation is under enormous financial pressure, and they are likely to be adverse to allow some questionable upstart such as ZNGA to enter online gambling, when the states can easily establish such an operation in house. This is not a complex business model. California already has the infrastructure in place for the state lottery. Go by the shiny new seven story Lottery headquarters just a few miles from downtown Sacramento. It's in a run down area, and the shiny building sticks out like a sore thumb. California can and probably will establish legal online gambling right out of this structure, and I imagine it could be up and running in less than 60 days once legislation is passed. This state is fundamentally bankrupt, so there will be enormous impetus to start such an enterprise. Why would California want to share the winnings with some company like ZNGA? There is absolutely no reason to.