Facebook and Zynga retool their relationship
The Zynga logo is displayed on the front of the company's former headquarters in San Francisco, Calif.
When Facebook and Zynga promised to be “exclusive” two years ago, Facebook had millions of users but was still figuring out how to make money. Zynga knew how to make money -- it does it by selling virtual “goods” in its games -- but needed more users, said Arvind Bhatia, an analyst at Sterne Agee.
“Both of them grew up together and they both were benefiting from each others businesses,” Bhatia said.
And so the two companies made a commitment. Among other things, Facebook promised to promote Zynga’s games like Farmville over those by other companies. And Zynga basically promised to launch new games like Mafia Wars on Facebook first.
In their honeymoon period, about 15 percent of Facebook’s revenues came from Zynga. And Zynga made 80 percent of its money on Facebook. But lately Zynga’s revenues have been falling and Facebook’s getting a wandering eye.
“What has happened is Zynga’s own business seems to have peaked,” Bhatia said. “Facebook obviously wants to see growth in that business and so they are looking for other partners.”
And so Bhatia believes Facebook gave Zynga the “let’s just be friends” talk. At least that’s one take on the break-up. Daniel Ernst, an analyst for Hudson Square Research, doesn’t think it was Zynga that got dumped.
“Everyone’s focused on the negatives to Zynga but the reality is this actually gives them a lot more opportunity,” Ernst said.
Ernst says like everything else social gaming is going mobile. And in that space, Apple’s app store and Google Play are the catches and now Zynga is free to date them with no strings attached.
Facebook and Zynga have changed their relationship status to "It's complicated." Remember when games were made out of cardboard and you actually played face-to-face? Which board game was your favorite back in the day? Answer our Facebook poll!