As Zynga's stock plummets and analysts arrive late to the conclusion that the social game giant's Facebook business -- 80 percent of its bookings -- is in decline, we're faced with a lot of questions. What can the company do now? What implications will this highly-visible nosedive have on other social investments, and on the landscape at large?

Also, how did anyone who's played a Zynga game on Facebook not see this coming?

Zynga has long operated on Facebook through a business model that saw quick and massive user acquisition early on. When a game's numbers began to decline, it launched a new game that frequently did better than the first, but rarely enough to make up for shortfalls in its predecessor.

That Bottleneck

Zynga launched its IPO amid investor concerns about the sustainability of its Facebook business, and on Gamasutra, I analyzed the significant user engagement bottleneck by which Zynga ramped up players with early plentitude, steadily increasing the friction until long-term players were forced to pay. The company must have been betting on the fact that although plenty of players would be deterred, the ones that remained would be the "whales" that would carry the game through their higher-than-average spend.

And when a game reaches a certain critical point where new user acquisition plateaus and long-term users finally get bored, Zynga has historically launched new games -- from FarmVille to CityVille, through FrontierVille to Empires and Allies and CastleVille.

The company's network was enormous enough that it could cross-market, and it's not hard to see how players who are tired of one setting might be lured to a new one by the promise of sparkly design evolutions and fresh styles. As SimCity Social launched on Facebook, Zynga countered with The Ville, a trend-chaser that quickly gained popularity as CastleVille continued to bleed.

It'd be interesting to see the metrics-master's data on how many Zynga games on average an individual plays. But since the business model is basically the same across the entire portfolio, even its most loyal players will cross a threshold by which they can no longer be sold -- whereby if they've reached fatigue with the required microtransactions and notification spam of one title, they won't expect a new title will offer much more. Social game players are surprisingly savvy strategists, and it's not hard to conceive of them becoming inured.

I've compared the business model to that of drug pushers before -- start with freebies, make access easy, and then make gratification increasingly unavailable as the customer gets hooked. Drug dealers, though, try not to let their customers die. Zynga, I believe, was so focused on driving metrics that its games lost any relationship to fun and entertainment, and now nobody on Facebook wants what it's offering anymore. Even social gamers that like to spend money are finding much more appealing opportunities on the mobile platform, where they have much more control over their social network and can gain a much more significant experience value for minimal spend.

Do Analysts Play?

I wonder how many industry analysts took time to really understand the experience of playing a Zynga game and why its userbases aren't sustainable in the way a game like World of Warcraft's is. This isn't the first time that the investment landscape around games has been harmed by analyst and suits' poor understanding of how the game industry works. It often seems investors are putting money in the wrong places thanks to incomplete information on the "death of core games" that excludes digital, or due to big gold rushes toward charismatic gamification pitches that don't have measurable real-world impact yet.

It would be a shame if this massive mis-estimation of Zynga has a negative impact on other social game investments that might offer the alternative approaches that Facebook so desperately needs. It continues to amaze me that these notification-grinding engines are thus far the biggest part of what game design has had the opportunity to do with some 900 million eyeballs.

Finally, there's the question of potential for Zynga's own Zynga.com platform. Correctly recognizing that users were balking at having to constantly send out notifications to friends without being sure which friends really wanted that much exchange, the company's own network aims to alleviate that bottleneck for serious users who can exchange gameplay goods and tasks with one another, even if they aren't Facebook friends. The Zynga.com interface is a little overwhelming, and for most players to transition onto it, they have to be actively playing one of the Facebook games anyway, so it's unclear how much this solution will help Zynga bolster its lagging books.

Many analysts have been quick to point out that Zynga's Facebook user attrition has become more grievous as social games transition to tablets and mobile phones, platforms much better suited to the quick-session, idle-time nature of modern social and casual play. In that respect, Zynga might be partially a casualty of its platform transition, something investors would do well to take into consideration lest the social gaming baby get thrown out with the bathwater.