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Facebook Streamlines Zynga Relationship

| 30 Nov 2012 13:55
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The social network is no longer exclusively bound to Zynga, nor is the game maker bound to Facebook.

In the past social game maker Zynga had preferential treatment from Facebook; Facebook wasn't allowed to compete with Zynga and, in exchange, Zynga was required to use Facebook's monetization system. Things have changed, and in a new agreement worked out between the companies this week, neither is bound as intimately to the other any more.

Zynga can now use other payment systems, and Facebook can start making its own games. Not that it wants to, a Facebook spokesman was careful to say; this is all part of a streamlining process. "We will continue to work with Zynga, just as we do with developers of all sizes," the spokesman said.

Zynga's stock price fell 13% after the news was released. Recent economic woes have hit it hard, and its disagreement with Kixeye is starting to look nasty. A relaxing - not quite a severing - of ties with Facebook at this point is probably a worse deal for Zynga than it is for Facebook.

However, while Facebook says it isn't about to start competing with Zynga on the social game front, Mark Zuckerberg is on record as saying that gaming on Facebook isn't doing as well as he would like.

"On the one hand our payments revenue from Zynga decreased by 20 percent this quarter compared to last year," said Zuckerberg at the time. "But the interesting thing is that the rest of the games ecosystem has actually been growing." In fact it increased by 40% over the financial year, which begs the question, why wouldn't Facebook want in on that action? Facebook may say it's not in the business of building games, but it's hard to believe that Zuckerberg hasn't been considering the notion.

Source: Reuters

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