Trends To Look Out For In Zynga’s Declining User Base
Zynga (NASDAQ:ZNGA) reported a 12% decline in revenue from online games in the first six months of the year, which was partially offset by a 31% increase in advertising revenue in the same period. This decline in online games revenue has been fueled by the drastic decline in the company’s user base over the last twelve months. In the second quarter, Zynga’s user base declined on both the web and mobile platforms, with average daily active users (DAUs) declining 15% y-o-y to 18 million and average monthly active users (MAUs) declining 27% to 61 million.
Notwithstanding the decline in active users, there were three positive trends for Zynga in terms of user engagement and monetization in the first six months of 2016:
- Daily user engagement (DAUs/MAUs) increased: Even though Zynga’s monthly active user base declined by about 27% in the last one year, its daily active user count declined by only 14%. This shows some stickiness in the company’s loyal active user base. MAUs are also likely to improve in the near term with the launch of new games such as CSR 2 and FarmVille: Tropic Escape.
- Improvement in payer conversion rate (MUPs/MUUs): Stickiness of Zynga’s loyal user base can also be gauged from the fact that despite a 27% decline in MAUs, its monthly unique users declined by only 17% and its monthly unique paying users declined by just 10%. This helped the company improve its payer conversion rate from 1.6% in Q2 2015 to 1.8% in Q2 2016.
- Growth in average daily bookings per MAU (Monthly Bookings/Average MAUs): One of the most positive developments for Zynga over the last year has been its ability to generate higher bookings per active user. Despite a 27% year-on-year decline in MAUs in Q2 2016, its bookings remained the same at around $175 million, translating into booking per average user of $2.9 in Q2 2016 compared to bookings per average user of $2.10 in Q2 2015.
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