Thursday, May 13, 2010

Will Zynga leave Facebook?

Facebook and Farmville developer Zynga may go separate ways, causing the casual game developer to find another home for its users to play.

The basic issue here is that Zynga isn't cool with the 30 percent cut that Facebook takes from customers using Facebook credits to purchase Zynga's in-game products.

That 30% is a huge cut. Zynga is said to be making about $300 million a year and only 1/3 of it is thru lead generation. That means Facebook could be getting 30% of the other 2/3 (or $200 million) which is $60 million.
That’s 60 million reasons for Zynga to re-think its Facebook partnership. In one end, Zynga relies a lot on the Facebook network to acquire traffic but at the same time Zynga is the top advertiser on FB. The two clearly needed each other. It’s interesting to note that the owner of Zynga, Mark Pincus, is also an early investor in Facebook.
If the breakup does happen, users will have to choose between Facebook andFarmville (not really, actually, since users can still go to both but that would mean less time spent on FB). In any case, gamers can also go to and log in using the FB accounts to continue to play.

No comments: