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Zynga Won't Pursue Real-Money Gaming License In The U.S.; Shares Drop 13% In After-Hours
Zynga is giving up what many investors had hoped might be its trump card: a real-money gaming business in the U.S. The company, which has been testing out real-money casino games in the U.K. said it won’t be pursuing a U.S. license after all in its second quarter earnings report today.
Sources tell us this is a decision to focus and not spread the company too thinly between real-money gaming, diversifying onto mobile and maintaining a core on Facebook. If it weren’t for the political and legal complexities of opening up real-money gaming in state after state, the business could have been interesting for Zynga, especially considering how long Zynga Poker has dominated both on the Facebook platform and on iOS and Android. None of Zynga’s social casino games, which use virtual currency, are affected by this. Shares declined 13 percent in after-hours to $3.02.
In the release today, Zynga said:
Zynga believes its biggest opportunity is to focus on free to play social games. While the Company continues to evaluate its real money gaming products in the United Kingdom test, Zynga is making the focused choice not to pursue a license for real money gaming in the United States. Zynga will continue to evaluate all of its priorities against the growing market opportunity in free, social gaming, including social casino offerings.
Zynga has long been exploring real-money gaming. It partnered with operator Bwin.Party to offer titles in the U.K. Then last November, the company took its first steps toward real-money gaming in the U.S. by applying for a “preliminary finding of suitability” from the Nevada Gaming Control Board.
It’s not that this option is forever off the table. It’s just that the company is in the middle of a significant platform transition now, and real-money games — which would probably only be available to players in Nevada at first anyways — could be distracting.
Y Combinator-Backed Lob Debuts A Cloud Printing & Shipping Service For Developers
Want to build your own Postagram? You could with Lob, a new developer API for integrating printing and shipping services into applications that’s officially opening its doors today. The company makes it possible for a business to implement a programmatic means of printing, packaging, and shipping items on demand, including things like business cards, photos, posters, letters, postcards, checks, stickers, and more. During its brief testing period, Lob saw sign-ups from customers like CrowdTilt, ZenPayroll, LendUp, and others.
Founded just a couple of months ago by University of Michigan grads Harry Zhang and Leore Avidar, Lob is participating in Y Combinator’s summer 2013 program. Today, it already has hundreds of customers and is generating revenue, the founders say.
Prior to Lob, Zhang worked as a product manager at Microsoft, where he saw first-hand the need for such a service. “I was working on a campaign at Microsoft where we had to put together offers for all these different customers – all having to go to different destinations, all of which had to be customized,” Zhang explains. “And when it got to the part where we had to have them printed and mailed, we realized there was no good way to actually automate that process.” Instead, the company had interns sitting in a mailroom for a couple of weeks, stuffing envelopes.
Meanwhile, Avidar’s background includes time spent first at Citigroup then at Amazon Web Services, where he learned more about how cloud platforms work. He says that basically, with Lob, they’ve taken the AWS model and applied it to a different type of industry.
The service arrives at a time when many of today’s printers aren’t as technically savvy as the startups and other businesses that need to use them. Their older systems use SOAP and XML, limiting access to what’s possible. Meanwhile, the need for online printing grows – it accounted for 18 percent of all printing in 2011, and is expected to reach 30 percent next year, and 50 percent by 2017.
But unlike services provided by consumer-facing retailers like FedEx Office (formerly FedEx Kinko’s), or Uprinting.com, for example, Lob is not meant to be a consumer-facing solution, but rather a tool for developers. Using the company’s RESTful API, developers can send one-off print jobs as needed, or can request volume pricing when buying in bulk.
The founders see a few primary use cases for its service. One is fulfillment for businesses that don’t want to hold inventory – like a company that sells posters, for instance. Because Lob supports variable data and customizations, another area being targeted is in industries like finance or real estate, where businesses may be required to send things like bills, invoices or statements through the physical mail. It could also be useful in HR, where companies are continually mailing out forms to employees, like new hire packets. And finally, Lob can be used to send out physical checks, like those handled by a payroll service.
Lob’s API offers an address verification service (free for U.S. address and $0.15 for each international address), plus Smart Packaging, where it will pick the best packaging type automatically unless a developer specifies otherwise. And it routes jobs to the nearest printer in its network to save on shipping times and cost.
Avidar says that Lob’s network of printers is one of its strong suits. The printers are not ordinary print shops, but ones which have been standardized by having custom integrations built into their systems and workflows. The are the HP Indigo’s and the Heidelberg’s of the world, he adds, not the Vistaprint’s.
The Sunnyvale-based startup is only a couple of months old, and has been growing by 300 percent every week during its brief alpha and beta trials. Today, the founders are the only two full-time employees and they want to keep things small for now, and hold off on fundraising as they have paying customers. Interested users can sign up for Lob here or read through the developer documentation.
Nexus 7 Trade-Ins Suggest Lots Of Upgraders To New Model, Little To No Interest From The iPad Crowd
The new Google Nexus 7 is a big improvement over the original with a bunch of additions like LTE and a super high-resolution display – the best in tablets, in fact. And that’s driving a lot of first generation device owners to trade in their old Nexus 7, according to gadget buy-back site Gazelle. There was a 333 percent spike in the number of Nexus 7 tablets traded in compared to the same day last week, for example.
Between Tuesday and Wednesday, that spike was even higher – a 442 percent jump in Nexus 7 tablets happened between the day before Google’s official unveiling of the new model, and the day of. The Nexus 7 trade-in activity spiked so high that it made up nearly a quarter of all trade-ins for non-iPad tablets since the site began accepting them earlier this year.
Wednesday, the day Google made its announcement, was also the biggest Nexus 7 trade-in day at Gazelle to date, beating the next biggest day by 380 percent. That previous record was set when the new Nexus 7 leaked on July 17, which clearly prompted early adopters to take advantage of a small head start ahead of the big reveal.
The news means that Google Nexus 7 owners are probably happy with their devices and eager to grab new ones, by trading in their last-gen devices to fund their purchases, but there’s another stat that tells another side of the story: Gazelle saw no appreciable increase in iPad trade-ins on the new Nexus 7 launch day. That means Google probably isn’t luring iPad owners away from the iOS fold.
It’s probably not surprising to longtime tablet space watchers that the new Nexus 7, with all its apparent merit, isn’t an iPad killer. The Apple camp seems happy where they are, but the tablet market has plenty of room to grow; we’ll see if Google can expand outward, or if it’s mostly eating its own Nexus tail with this new model.
With New CEO Mattrick At Helm, Zynga Reports Loss of $16M And Revenue Decline Of 31%
Zynga’s revenues for the second quarter of 2013 declined 31% year-over-year to $231 million in the midst of a challenging transition that saw former CEO Mark Pincus hand over the reins to Don Mattrick.
The company had a net loss of $16 million compared to last year’s net loss of $22.8 million during the same quarter (which also had $95.5 million of stock-based compensation expenses). If you account for that then, the company’s net loss was $6.1 million compared to last year’s net loss of $4.6 million based on non-generally accepted accounting principles. Zynga said when it laid off nearly 20 percent of its staff last month that it expected to see a net loss of between $39 million to $28.5 million so this is actually a slight earnings beat.
“We need to get back to basics and take a longer term view on our products and business, develop more efficient processes and tighten up execution all across the company,” wrote Mattrick in the release. “We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters.”
Last quarter, COO David Ko said the company was in the midst of a “pause” to re-evaluate its entire game slate and that this decision would be financially apparent in this quarter.
This quarter’s revenue is projected to be even lower in the range of $175 million to $200 million, with a net loss of $43 million to $14 million.
Through the company’s pivot onto iOS and Android, Zynga has had to compete against older and historically smaller rivals from the Facebook platform like King and Kabam. Both of those companies have fared well with King’s Candy Crush Saga bringing it the top grossing spot and numerous Kabam titles in the top 25.
In contrast, Zynga just has its longstanding Poker franchise in the U.S. top grossing 25. Even today, nearly 70 percent of the company’s monthly active users remain on the web.
The losses in Zynga’s user base from not being able to hold onto its core Facebook customers are staggering. The company’s level of daily active users is not much higher than half of where it was a year ago at 39 million this quarter compared to 72 million in 2012. It also saw 187 million monthly active users, down from 306 million users in the same time period a year before.
The company’s launches like Draw Something 2 have also underperformed without any slots in any of the top 100 charts and Zynga’s other big mobile launch, Running With Friends, remains in 45th place in the U.S. top grossing chart. Zynga had six major releases this quarter including War of the Fallen, Draw Something 2, Battlestone, Solstice Arena and Running With Friends.
But older franchises like FarmVille and FarmVille 2 continue to do well as both games have grown combined bookings by 29 percent year-over-year.
Zynga’s struggles in diversifying away from Facebook and missing the pivot to mobile ultimately convinced Pincus to give up the CEO role, although he remains chairman of the board and serves as chief product officer. It’s now Mattrick’s 15th day on the job.
Amazon's Q2 Disappoints, Sales Up 22 Percent To $15.7B, Net Loss Of $7M
Amazon just reported second quarter earnings, with sales increasing 22% to $15.7 billion in the second quarter, compared with $12.83 billion in second quarter 2012. Net loss was $7 million in the second quarter, or $0.02 per diluted share, compared with net income of $7 million, or $0.01 per diluted share, in second quarter 2012. Analysts expected $15.74 billion in revenue, and $0.05 on earnings per share.
Operating income decreased 26% to $79 million in the second quarter, compared with $107 million in second quarter 2012.
“We’re so grateful to our customers for their response to Kindle devices and our digital ecosystem. This past quarter, our top 10 selling items worldwide were all digital products – Kindles, Kindle Fire HDs, accessories and digital content,” said Amazon founder and CEO Jeff Bezos, in a statement.
“The Kindle service keeps getting better. The Kindle Store now offers millions of titles including more than 350,000 exclusives that you won’t find anywhere else. Prime Instant Video has surpassed 40,000 titles, including many premium exclusives like Downton Abbey and Under the Dome. And we’ve added more than a thousand books, games, educational apps, movies and TV shows to Kindle FreeTime Unlimited, bringing together in one place all the types of content kids and parents love.”
Bezos didn’t address why Amazon missed on expectations for the quarter, but perhaps this will be revealed in the call. According to analyst estimates, the ecommerce giant was expected to post net income of $28.3 million.
It’s been an eventful quarter for Amazon. Towards the end of the first quarter, Amazon purchased social reading service Goodreads, which now has 20 million members. Amazon also expanded its international footprint,, including expansion to India. Additionally the company bought screen technology company Liquavista from Samsung.
Other news included the expansion of its grocery delivery service to LA and SF, a new Facebook-focused gifting product, an online store for 3D printers, and of course there were those smartphone rumors.
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