One more Facebook post- Zynga partnership and Facebook 0

May 18, 2010 § Leave a comment

I promise I’ll take a break from posting about Facebook after this one.

Two different pieces of news caught my eye and I wanted to share them here. The first one concerns Facebook and Zynga, the topic of an earlier blog post. Speculation was rife that Zynga was planning on starting its own game network dubbed Zynga Live. The fallout was being attributed to notifications, royalties and what not. Surprising one and all, and taking the most obvious route for both parties concerned, the two giants patched up and signed a five year agreement today.

What does it mean for Facebook?

Facebook will continue to draw all those casual social gamers that are hooked on Zynga published games (all 300 million of them). They will also start earning royalties (rumored to be 30%) on in-game micro-transactions when a user wants to buy the latest super fertilizer for their farms. A definite win for Facebook. If Zynga had left, not only would Facebook have lost some users at this critical time for the company, it would have also lost some credibility with other social game developers using its platform.

What does it mean for Zynga?

When the problems between Zynga and Facebook surfaced, there was a lot of speculation about the future success for the game company since much of its growth has been attributed to Facebook. Zynga definitely had a lot more to lose than Facebook if it left the latter. The deal means that there will be a drop in revenue for Zynga as Facebook will now claim its royalty share but it can count on more users to beef up the bottom line. The deal definitely means more to Zynga than Facebook and in a sense this deal was a very smart and practical move for them.

What does it mean for the users?

More games, more notifications, more addictive hours. What else did you expect?. A Treasure?

On a completely unrelated note, Facebook announced the launch of Facebook zero, a data charge free version of the social network for mobile users in emerging markets. This is definitely a good move whereby Facebook can rack up more users more page hits to garner more ad dollars. Further more importantly, it also gets them more user data for whatever they choose to do with it. It will be interesting to see the uptake in the coming months, but I expect it to be huge in India which already boasts a big Facebook user base. This might warrant a new post sometime in the coming months.

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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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