The game took a huge downturn when they introduced the turbo. We boycotted, wrote feedback. They didn't listen and I would estimate they lost at least 35% of their players. Then they introduced the coins, which caused another uproar...People leaving in droves. They have demonstrated they DO NOT CARE what their customers think and in an industry that is completely reliant on their playerbase, this is an imbecilic move. One only has to look at the complainers consortium page on Facebook to see the issues that lie within the game. Also, if they are down 33% year over year, wouldn't it be indicative that if they were to put things back the way they were just over a year ago, they would be back on track to growth. It's pretty simple, in my opinion. At the end of the day, however, it's just really sad that what was once considered the best photography game online, turned into a money grabbing, greedy machine that turned thousands of devoted players away.
Thank you for this write up. Talking to management about this. I am a medium sized Zedge shareholder and I appreciate another strong shareholder that care about this business and sees the value, potential of the company.
And wanted to make comment about your experiment where you came in first with a less than quality photo. I was one of the people who left when they introduced turbo, but I got bored and created a new account with new photos to see if anything had changed. And I, as well, won the flash challenges. As I progressed I didn't win another after ad noticed it was all the newbies winning them )or that every participant had a generic name (a first name with an initial as the last name) and they were all male. It was easy to surmise that they were bots and my theory is they allow the new players to win so they have that rush of adrenalin, and get that hit of dopamine so that they are more likely to stay. But then after those first couple wins, youd be entering the real matches, where the gurus were rarely winning and the challengrrs experts and masters were winning. In doing so, however, they alienated the gurus and you will see there's typically only one or two gurus in each flash challenge.
Another aspect they've introduced is the duels ...where you put one picture up and you're in a match against one other player....now, this is a joke because they say "winner takes all", but if each person spends 100 coins to enter, this should mean that the prize is 200 but you guessed it, it's not. They say they enter those 2 pics into the current match and allow the other players to vote but most times each pic is gaining points at the same increment (one of the major complaints in the consortium). Also, there has been numerous times when an off topic pic will win above a quality one especially if you're about to win the "streak" or there's a coin reward in the "missions". So it has become blatantly obvious that the game is rigged. If you look at the winners of each of the main challenges, you will see a very obvious pattern , and that it's almost always the same people winning...and some with photos theh had previously won with, and despite them being reported -as this is against their rules, nothing was done.
New Subscriber ! Great set of write up's, thanks for sharing. Playing devils advocate here, I see a couple of issues. That doesn't take away from the story, just would approach this with eyes wide open.
You're giving mgmt. a lot of credit here.
1) They overpaid for a bad asset
2) They misaligned their costs related to said bad asset
3) They failed to quickly (until now) realign their cost structure/ divest
4) They, by all accounts, managed it poorly
5) They potentially haven't immediately divested
I hear what you're saying re GuruShots being a free call option, but it's not. There's an opportunity cost to everything. Also, I don't think you're not taking into account the cash burn needed to fund the revenue growth. And you're forgetting the shareholder destruction of ~$35m. (can't recall exact amount, but this should be ballpark)
Also, be wary of mgmt. They are sales people. They will make you feel good & tell you what you want to hear. Grain of salt needed here...
Couple of excerpts that worry me
"We love the current management "
How ? Shareholder return has been abysmal.
"To be clear, we have full confidence in what management will come up with- and this is just our 2-cents. Even if management does not take the steps we list out, we will remain long because management’s docs is at a turnaround of GuruShots and cutting costs- which is all we ask for."
Unsure how you could given what JR has overseen.
"The value generation classic that management is already implementing: Share buybacks. Impact: Positive. Likelihood: Almost 100%"
I would haircut this unless we see a large buyback. Didn't it take them 3 years to complete their first buyback ??
The game took a huge downturn when they introduced the turbo. We boycotted, wrote feedback. They didn't listen and I would estimate they lost at least 35% of their players. Then they introduced the coins, which caused another uproar...People leaving in droves. They have demonstrated they DO NOT CARE what their customers think and in an industry that is completely reliant on their playerbase, this is an imbecilic move. One only has to look at the complainers consortium page on Facebook to see the issues that lie within the game. Also, if they are down 33% year over year, wouldn't it be indicative that if they were to put things back the way they were just over a year ago, they would be back on track to growth. It's pretty simple, in my opinion. At the end of the day, however, it's just really sad that what was once considered the best photography game online, turned into a money grabbing, greedy machine that turned thousands of devoted players away.
Thank you for this write up. Talking to management about this. I am a medium sized Zedge shareholder and I appreciate another strong shareholder that care about this business and sees the value, potential of the company.
Thanks a lot David!
And wanted to make comment about your experiment where you came in first with a less than quality photo. I was one of the people who left when they introduced turbo, but I got bored and created a new account with new photos to see if anything had changed. And I, as well, won the flash challenges. As I progressed I didn't win another after ad noticed it was all the newbies winning them )or that every participant had a generic name (a first name with an initial as the last name) and they were all male. It was easy to surmise that they were bots and my theory is they allow the new players to win so they have that rush of adrenalin, and get that hit of dopamine so that they are more likely to stay. But then after those first couple wins, youd be entering the real matches, where the gurus were rarely winning and the challengrrs experts and masters were winning. In doing so, however, they alienated the gurus and you will see there's typically only one or two gurus in each flash challenge.
Another aspect they've introduced is the duels ...where you put one picture up and you're in a match against one other player....now, this is a joke because they say "winner takes all", but if each person spends 100 coins to enter, this should mean that the prize is 200 but you guessed it, it's not. They say they enter those 2 pics into the current match and allow the other players to vote but most times each pic is gaining points at the same increment (one of the major complaints in the consortium). Also, there has been numerous times when an off topic pic will win above a quality one especially if you're about to win the "streak" or there's a coin reward in the "missions". So it has become blatantly obvious that the game is rigged. If you look at the winners of each of the main challenges, you will see a very obvious pattern , and that it's almost always the same people winning...and some with photos theh had previously won with, and despite them being reported -as this is against their rules, nothing was done.
New Subscriber ! Great set of write up's, thanks for sharing. Playing devils advocate here, I see a couple of issues. That doesn't take away from the story, just would approach this with eyes wide open.
You're giving mgmt. a lot of credit here.
1) They overpaid for a bad asset
2) They misaligned their costs related to said bad asset
3) They failed to quickly (until now) realign their cost structure/ divest
4) They, by all accounts, managed it poorly
5) They potentially haven't immediately divested
I hear what you're saying re GuruShots being a free call option, but it's not. There's an opportunity cost to everything. Also, I don't think you're not taking into account the cash burn needed to fund the revenue growth. And you're forgetting the shareholder destruction of ~$35m. (can't recall exact amount, but this should be ballpark)
Also, be wary of mgmt. They are sales people. They will make you feel good & tell you what you want to hear. Grain of salt needed here...
Couple of excerpts that worry me
"We love the current management "
How ? Shareholder return has been abysmal.
"To be clear, we have full confidence in what management will come up with- and this is just our 2-cents. Even if management does not take the steps we list out, we will remain long because management’s docs is at a turnaround of GuruShots and cutting costs- which is all we ask for."
Unsure how you could given what JR has overseen.
"The value generation classic that management is already implementing: Share buybacks. Impact: Positive. Likelihood: Almost 100%"
I would haircut this unless we see a large buyback. Didn't it take them 3 years to complete their first buyback ??
Another reason to be sceptical of management. CEO makes ~$500k annually & only owns ~$50k of stock.