Facebook and Zynga heading for a divorce? – or not…

May 10, 2010 § 2 Comments

Update on May 18: Zynga and Facebook made their peace and signed a 5 year deal. Seems to be a win for Zynga and a WIN for Facebook. See full press release here.

When I first read this last week, I thought it must be a mistake or just another rumor. Since then, I have read multiple online sources [1][2] confirming the bad blood between the two powerhouses and with the impending launch of Zynga’s own platform, there will be an official divorce. The TechCrunch article which seems to be the reference du jour on the subject matter seems to indicate that Facebook wanted  Zynga to route its micropayments through its Facebook Credits system for a 30% fee which wasnt something Zynga wanted. Other skirmishes on message control and such were also making it hard for Zynga to continue expanding its games that way it wanted on Facebook.

The post here analyzes the potential business implications for the two parties. It definitely sets the stage for trying to figure out who loses more: does Facebook lose number of page visitors (and thus ad revenues) from leaving Zynga players and also credibility with Facebook app developers or does Zynga lose a *LOT* of revenue and customers by leaving its largest platform. Only time will tell the result of this battle. Zynga has been rumored to be developing a Flash-free version of its games for the iPad which could expand its market but there are only a million or so iPads out there compared to the 300 million plus Facebook users of whom 80 million of them are active Farmville players. Currently, users of Apple’s mobile platform play a gimped version of Zynga’s games and if that changes, it could mean a new and probably higher margin revenue stream for Zynga.

The first bullet has not been fired as yet, but it could come anytime now. Until then, for all those millions waiting to seed their next plot or rescue a unicorn, what are you waiting for?

Update: Zynga is bleeding users. And this is without any public announcement of a move away from Facebook to its own rumored Zynga Live platform. This is getting interesting by the minute. Will Zynga capitulate and agree to staying on Facebook?. Or will then take a pantheon spot in Apple’s upcoming casual game platform on the iPhone/iPad/iTouch.


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