This is why speculating on a 'sure thing' is such a bad idea. Investors do it in all walks of life but recently they have had a nasty habit of pumping the fuck out of social gaming companies and driving up hype. There seems this special type of investor that thinks that because something is making money now and has gone up in the past it MUST just keep going. They makes these decisions without the scantest knowledge of the sector they are investing in and assume that as long as something keeps going up then everything will always be fine. (these types of investor seem to also run Activision) You would think people would have learned what a bubble looks like after that whole kerfuffle in the 20s, the lie of the bull market and all, but i suppose not. And a bubble we have. The signs have been there for a while, as i mentioned previously EA threw their money down a Playfish shaped whole, never to be re-coped, but everyone seems a bit to baffled to say anything about it. We seem to have a "New World" mentality in the gaming press post-Wii assuming that everything will not go as before but ass long time gamers i think we can use old assurances and a dash of other sectors to make some educated guesses.
Take the dot.com boom for example, a lot of clueless investors throw their money behind Internet companies because they seem to be magic money makers. Many of the paper millionaires we saw were just that and the value of most of these companies, and consequently their shares, dropped to a big fat sum of zero. Social and in a slightly different way mobile games have also done this; massive investment in something that is seen as a new, bottomless money spinner. The games journalist is in a sticky situation here; if you go with this line then you risk looking entrenched, embittered and irrelevant. If you go the other route and tout the rise of the social gaming you risk a snap-back from the traditional audience if all goes tits up. No one quite likes shoving your own words in your face like the forum dwellers. I think the main fear is one of looking closed off and insular, from one generation ago there has been an audience explosion in multiple places and at first many reacted with pretty irrational fear. But i think many should be able to see the underlying problems with the social gaming boom.
All it takes is a small shift in usership or advertising confidence and a million dollar prized cow can turn out to be a dog-turd. This isn't even going into mismanagement, small companies that make it big quick have a nasty habit on not being able to deal with it or making terrible decisions. Recently Zynga has decided to hoover up a sum total of 15 companies with its new found (if ethically and creatively dubious) wealth. Fast, forward to today and profits have fallen 90%, news with has been delayed since June due to the "Tough market conditions" leaving me with the tentative feeling that the news has been released over a more favorable range to their original numbers.
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The shit will only really hit the fan when said investors get a whiff that their particular horse in this race might be horribly overvalued. When investor pull out in the sector starts i have a feeling it may not stop, speculators (especially when it comes to the fast world of tech) are ruthlessly fickle and jumpy as coked-up Meerkats. Here's hoping that a lot of good people don't get squeezed out of the industry all together as many social games have served as a foot in the door for new talent.