The first sign that casual gaming is going down the drain?

Social Media have been all the hype the last couple of years but it seems that hype may be coming to a stop. Zynga, the granddaddy of social gaming (Farmville, Mafia Wars) has reported a downfall in profits in its latest quarter results, going year-on-year from $27.2 million to $1.3 million. This is no less than a whopping 95% drop!

Qua revenue, things didn't go so bad. Revenue in the company's latest quarter was up compared to March, though also here we see a decline. Revenue grew with 15%, compared to 24% the quarter before.

Zynga claims that not launching any new games in the first half of 2011 (until Empires and Allies on March 31st) as well as spending more on acquisitions, hiring and international growth have caused the decline in profits. Also the transition towards the Facebook credits systems is listed as one of the causes.

Zynga plans to go public for the first time and is looking for $1 billion additional cash this way.

Having profits plummit like that for sure isn't a good move to get investors lined up, but it's better to have such a move now, than right after going public I guess.

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