Zynga Splits from Facebook
The popular social network game developer Zynga (NASDAQ:ZNGA) announced plans today to launch Zynga.com, a new place for gamers to play games made popular by Facebook. Zynga hopes to transform Zynga.com into a destination for those who want to play their games and connect with other players. The site should be up and running in the next few days, and all players will have free access to five of the company’s top games, including CastleVille, Words With Friends, CityVille, Hidden Chronicles, and Zynga Poker.
The new site is supposed to improve upon the gaming experience by adding a social aspect outside of the context of Facebook. Until now, Zynga has relied on Facebook for 90 percent of its revenue, with 200 million monthly active users playing Zynga’s games on the social network. Facebook will certainly be impacted by the new external gaming platform as well, with roughly 12 percent of its revenue coming from Zynga sales, of which Facebook gets a cut. A divorce from Zynga could change how games are played on Facebook, and could undermine the company’s upcoming initial public offering, as Zynga.com could take a big bite out Zynga’s Facebook users and related revenue.
Facebook still has rights to the games that Zynga has on its site, and Zynga has said it is not “un-friending” Facebook. Players with Facebook accounts can use Facebook and Zynga.com interchangeably. It’s even possible that Zynga.com could attract new users for Facebook (though it seems unlikely, given Facebook’s high level of market saturation). However, Facebook won’t get a cut of revenues from Zynga.com, which is likely to draw away some of the more serious gamers from the Facebook platform. The move could potentially be disastrous for Facebook, though as long as Facebook doesn’t take steps to punish Zynga, say by requiring Zynga to fork up a larger portion of sales made on Facebook, the situation looks like a win-win for the game developer.
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