PALO ALTO, Calif. —
Now Zynga has entered what looks like a death spiral, and nobody is surprised. This week the firm announced that users aren't flocking to its latest games, and as a result it's lowering its revenue expectations for the year. The announcement sparked another brutal slide in Zynga's stock price; shares were recently trading for less than $2.50 each, more than 75 percent less than at Zynga's IPO. Zynga has enough cash in the bank to stave off immediate panic, but now that the possibility of earning stock-market millions is looking dim, a number of the firm's top employees have left.
In some ways Zynga's demise — along with Facebook's IPO fizzle and investors' newfound distaste for advertiser-driven consumer sites — is a good sign for the tech industry. There was a moment earlier this year when Silicon Valley threatened to return to the unrealistic go-go years. The high-water mark was the early summer. Around that time a delivery man knocked at my door bearing a package from Zynga. It was about the size of a shoebox, but it weighed nothing. And that's pretty much what it contained — I opened the box to find a folded-up paper airplane sitting in a wad of packaging tissue. The airplane was an invitation to an upcoming Zynga press event. I found the whole thing distasteful. Like the million-dollar rooftop launch parties and the Super Bowl sock puppets that defined the last boom, the invitation was a waste of money and creative energy that should have been used for something more productive.
Zynga's seeming decline marks the end of the bubble. It suggests that investors and customers can't be hoodwinked for long. Now, if the company has any hope of surviving, it's going to have to do something that it's never done before: Start building amazing things the world hasn't seen before.
Manjoo is Slate's technology reporter. @fmanjoo