Facebook is (Not) Dead

Facebook has been catching a lot of flack lately, but will its recent earnings call lower the heat a little?

Despite all the pundits pointing to the downfall of Facebook over the past week or so, it turns out that Zuckerburg and friends aren’t doing all that bad. After Facebook’s earnings call for Q1 2013, it seems that the company is doing A-OK, with a $219M profit, up 7% from a year ago, and revenues up 38% to $1.46B.

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Facebook is not strong in mobile…

The pundits need to catch up with the times. While 12 months ago, Facebook may not have had any revenue from the mobile side, nor a very strong mobile plan in action, now, 30% of its profits are attributed to mobile ad sales… not bad, going from $0 to $65.7M in a year.

While Facebook does have a host of other mobile social networks such as LINE and WhatsApp, the company did snatch up the wildly popular mobile phone photo sharing app, Instagram, last year. Just before the earnings call, Facebook also introduced its “Facebook Home” app on Android, integrating itself deeper into the OS, along with a revamped version of the Facebook Messenger.

Facebook is now reporting that the number of users accessing its website on PCs is falling, however, the number of people accessing via mobile is increasing. By Christmas 2012, more than half of its users were accessing Facebook via mobile, where nearly a quarter of its advertising revenue derives.

Users are leaving Facebook…

During the past year, Facebook has lost about 10M users in the US, and the MAU (monthly active users) in the UK has not grown. Pundits are quick to point to these figures from Nielsen as proof that Facebook is yesterday’s news.

At the earnings call however, Facebook showed the entire picture, which was 1.11B MAU worldwide on its website (not just the US and the UK) which is up 23% from a year ago, and 751M MAU on mobile, which is up a whopping 54% compared to a year ago.

What the Nielsen ratings do not show is that while users in developed nations such as the US and UK have probably peaked, users in lesser developed countries are now just catching up and getting on board.  It makes sense though. For developed countries such as the US, UK, Japan, and others, Facebook membership is probably at, or near saturation, that it would be natural to see some fallout. Hopefully the number of users joining from lesser developed countries will collectively make up for the 10M users lost in the US last year.

Zynga is tanking, and so will Facebook…

Nothing could be further from the truth of this sentiment, at least according to the earnings call. Without naming names, Facebook CFO David Ebersman reported,

“We’re pleased that Q1 represented our largest three months quarter of games revenue to date despite a 37 percent drop in year over year payments volume from our largest developer, as our other developers increased their payments volumes by almost 60 percent and we saw a record number of people playing games on Facebook.”

I think we all know that the “largest developer” is Zynga. With Zynga falling, and hoping that online gaming (meaning gambling) will pull it back up on its feet, newer entrants like King and Wooga are coming in to take over.

So what do you think? Is Facebook still relevant these days? Are the numbers just hyped up? Do the numbers even matter? Zynga games have generally sucked in the past, so has that ruined it for any up and coming Facebook games?

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mchiu is an old-timer, falling in love with video games since the introduction of Pong. Nowadays, his passions in gaming center around social and political issues, game development, promotion of games as an art form, promotion of games as sport, and the business and economics of games.