Zynga Tumbles After Abandoning Online-Betting Plan

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July 26 (Bloomberg) -- Zynga, maker of the social-networking game “FarmVille,” plunged as much as 20 percent in early trading after abandoning plans to enter the online-gambling business in the U.S. Jon Erlichman reports on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Pursue a license for online gambling in the united states, a business that many investors hoped would salvage the struggling game maker.

New c.e.o. took the helm so was he behind this decision?

Our west coast correspondent is in l.a. with more.

John, to be fair, donaldson has only been on the job a couple of weeks but people are already asking, what is he doing behind the scenes?

Oh, in a big way.

I mean, you know, the typo just highlighting the facts that tough for zynga to get a lot of things right right now.

The social gaming market, which zynga in a lot of ways pioneered and got a lot of credit for and helped it on a way to a very high profile i.p.o., is a very competitive market.

It's fast growing but zynga has learned that it's just tough to keep up the hits.

And that's what you've seen with these results.

The fact that even though the social gaming market is exploding, the number of people who are playing games that zynga makes and the time that they are playing them for, the trends have not been very good.

And as a result the key way that zynga makes money, through, for example, selling stuff inside those games, the virtual goods, the trends have not been favorable.

And all the c.e.o. can really say is, we're not happy with the performance, i've got to take upwards of two to four quarters to figure out how this is going to play out.

So basically telling people over the next whatever it is, 12 months, things might still be kind of ugly for us.

But i'm going to talk to the team, get everybody focused, maybe try to find a way to get back to where we were, especially with facebook, where obviously they had the early ties and strong relationship and benefits from, where they have seen their games drop off dramatically.

Real money gambling seems like it could have been a big part of zynga's future, potentially a challenging part.

But an opportunity.

Why walk away from that?

This seems -- the messaging from the company is that this is a focus thing.

You sort of hinted at this earlier.

Who is -- whose decision ultimately was it to move away from real money gaming in the united states?

The c.e.o. certainly had a role in it.

If you listen to what he said on the conference call last night.

They make it sound like it was a group decision overall.

But here's somebody who's trying to get everyone focused on something in theory that is a simple idea to get around.

We're pretty good at making games, social games, the market is growing, let's stay with that.

Let's find ways to get better at it.

Let's get ways to get better at it in mobile.

If we're all of a sudden focusing on what's really a totally different business for us, we're not going to have the focus and we don't have that, you know, we're not in a position where we can afford to take that risk right now.

All right.

He's got a tough job ahead.

John, thank you.

This text has been automatically generated. It may not be 100% accurate.

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