The future of social gaming is grim. Zynga’s 100+ employee layoffs, its CFO just defecting to Facebook, and its stock prices plummeting are key indicators that this may well be the case. Yet beyond these empirics, there are reasons why Zynga’s failure (or coming failure, depending on how you look at it) is structural, the result of a fundamental business problem which cannot be solved by corporate restructuring. I’m talking about the fact that Zynga’s goal of making money through games with frequent users is contradictory with the reality that the only games which can be sensibly monetized are impossible to implement on the Facebook platform.

In order for a game to have frequent users, it must be a good game, or at least one with lots of social value. This is why Zynga’s games have succeeded so much in the past: one can debate the merits of Farmville or The Ville, but no one can deny that its social network-scale growth to millions of users made the Zynga model seem so attractive in the onset. However, one must look back to the basics of user growth. Surely social dynamics have a lot to do with growth after a certain point (for example, anyone currently without a Facebook essentially needs to have one because everyone else does; or, one may be socially compelled to adopt a certain friends once enough of one’s friends do so), yet to get to the point past which social dynamics dominate the growth model, the product in question must have some value. For games, that means things like fairness and accessibility. Cow Clicker is an example of a game which some may argue does not have much value, yet its widespread adoption is a testament to the core notions of fairness and accessibility. A game doesn’t need to be all that exciting; it just needs to be exciting enough to a broad enough range of people in order to reach the point past which the social aspects of the game will help it dominate. This is the crux of the reason why Zynga’s games fail to have frequent, consistent returning users, and will continue to do so if they continue to use the same model: when previously fun games such as Tetris now enable Facebook’s affluent users to gain unfair advantages (this is essentially the model of every social game on Facebook), these games become unfair and destroy accessibility for users who are simply not able to afford the cost of winning, and, more critically, of those users who do not care enough about the game to pay to win. So how was Farmville, for example, able to reach a critical mass of millions of players despite a similar monetization strategy. One answer is that Farmville taps so well into users’ reward-competition psychology that it was able to gain enough users for its excellent utilization of the tool of social capital to be able to dominate its growth curve. However, the failure of Zynga is that even its successful games are losing popularity. An increasing population of users leads to diminishing returns on the social side, while the game’s negative aspects may be exacerbated every time social effects get amplified; “winning” at the game becomes that much more valuable, prompting more and more dedicated users to take advantage of pay-to-win, leaving currently potentially dedicated users unsatisfied.

In order to be successful in the future, Zynga will need to change the way it makes money through social gaming. Perhaps Facebook is not the best platform. The problem Zynga will have to navigate is that its existential reliance on Facebook perhaps will make the cost of moving forward as a company too great to bear sometime in the future..