Facebook and Zynga No Longer BFFs, There Goes The Farmville
In what's likely to come as a surprise to no one, Facebook has called for an end to its close relationship with Farmville-creator Zynga. Unlike other game developers that use Facebook as their platform of choice, Zynga had access to promotional advantages that others didn't have. Essentially, if Zynga scratched Facebook's back, Facebook would repay the favor. This has paid off handsomely for Zynga, as it's been reported that a staggering 80% of its revenue has Facebook users to thank. Similarly, CNN Money states that 13% of Facebook's revenue in Q1 - Q3 2012 came from Zynga.
Not long after the unveiling of its first game, Zynga became an inspiration to others hoping to cash in on the social networking craze, but in recent months, the company's future has been clouded with uncertanties, and this latest move on Facebook's part doesn't bode well for changing the path it's on.
This past July, Zynga was slapped with a class-action lawsuit that stated CEO Marc Pincus and others used insider knowledge to sell off a load of shares before its disappointing Q2 results were released.
Though it may seem like a bad thing that Zynga will no longer have its special advantages, analyst Michael Pachter thinks otherwise. Being freed from the "shackles" of Facebook means that the company can promote its own gaming platform better while opening up the ability to access more payment options (which were limited due to Facebook's API needing to be used).
Time will tell just how ambitious of a thought that actually is. When Facebook is responsible for 80% of your revenue, we're not dealing with a small transition here. The deal between Facebook and Zynga officially ends this coming March, however, so Zynga has a fair amount of time to begin transitioning its fanbase over to its own platform in the meantime.