Online social poker colossus Zynga are facing up to some tough competition after an up-and-coming competitor entered the market this week.
Gaming company Rounder Inc has targeted social networking websites, such as Facebook – Zynga’s heartland – as they prepare to expand their business in the hope that the US government proceeds with plans to legalise internet poker.
Rounder already has about two million customers making use of their website, RounderLife.com, although that is some way behind the estimated six million players Zynga Poker attracts daily at social networking site Facebook.
However, John Stanton – who originally founded Rounder as a company to develop green energy and biofuels – obviously reckons online poker is a better way to make money and expects his company’s popularity to rise dramatically when Rounder becomes available on Facebook next month.
Founder Reckons Rounder Inc More Popular with Players
In fact, Stanton claims that, while Rounder is already favoured by many players, the extra exposure gained by providing poker on Facebook will definitely boost the numbers of customers attracted to his gaming gadget.
Additionally, Don Baruch – who was just last week named as the company’s president and chief executive officer – believes that Rounder’s ability to “develop and exploit opportunities in real and virtual online and live gaming” will see them challenge Zynga as the leading social poker game.
Florida’s Baruch – who has an MBA in marketing and advertising – certainly knows what he is talking about when it comes to poker as he secured a World Series of Poker (WSOP) bracelet from 2007 when winning event #21, a $1,500 buy-in No-Limit Hold’em Shootout tournament, for $264,107.
So, as Rounder’s stock continues to rise, those at Zynga will be keeping an eye on developments over the next few weeks as the US government considers the legalisation of online poker in the North American nation.
Zynga Posts Huge Losses for 2011
Certainly, newly-public company Zynga will be more than a little concerned to see a rival emerging on Facebook as their initial financial report makes for worrying reading.
While Zynga enjoyed a 59% increase in revenue to just over $311 million, they also reported an income loss of $435 million during the last quarter of 2011 to take their total losses for last year to $404 million.
Although that is disappointing news for the business, it should be noted that their fourth-quarter losses were due mostly to a tax bill of $510 million related to their decision to become a public company in December last year.
Additionally, Zynga also increased their staff by 92% compared with 2010 and invested heavily in new technology and products during 2011.
However, that does not appear to have halted Zynga’s aim to move into real-money poker, with chief operating officer John Schappert saying that plan is still “very interesting” as they explore opportunities with numerous potential partners – even though their shares had dipped by a massive 17.77% by close of trading on Wednesday at $11.75 per share on American stock exchange NASDAQ.