Zynga Moves to Reduce Facebook Dependence
Zynga basically has been built on the back of Facebook, which contributes 96% of Zynga's revenue via virtual goods purchases by people playing FarmVille, CityVille, Mafia Wars and other games on their individual Facebook accounts.
It's not like Zynga has tried to downplay its Facebook dependence -- in its filings with the Securities and Exchange Commission, the company freely concedes it gets virtually all its revenue from Facebook.
Now, though, Zynga wants to show it's trying to establish some independence from the world's No. 1 social networking site, which will go public sometime in the spring.
Zynga on Thursday announced the Zynga Platform, which basically is Zynga.com with the ability to play games.
Shares of Zynga were up 7% to 14.09 by mid-afternoon Thursday, so Wall Street sees this as a positive move.
There already is a Zynga.com, of course. That's Zynga's website, where you can get information about the company and, naturally, tons of information and marketing hype about Zynga's many games.
What you can't do now is play a game on Zynga.com. Click on Castleville, for example, and you get a brief rundown of the game's features and an invitation to play -- on Facebook. Same with Hidden Chronicles.
Other games give visitors the option of also playing on Google+ and various mobile platforms. But not on Zynga.com.
That should change sometime in March, when Zynga.com is expected to initiate its transition (in 16 different languages) with a beta release.
In addition to providing a home for social-games players to connect socially, Zynga will allow third-party developers to create and publish games on Zynga.com. It'll be interesting to see what the terms are and how many developers will build for Zynga.com.
More interesting will be Facebook's response. Zynga took pains in its Thursday announcement to stress its ongoing relationship with Facebook:
Zynga.com is one of the first sites to be totally integrated with Facebook as an extension of the companies’ strong and collaborative partnership. It will allow players to log in with their Facebook ID and easily play games with their existing Facebook friends, as well as other people who love to play the same games.
But if a Facebook member playing on Zynga.com buys virtual goods, does Facebook still get 30% of the cut as it does now for purchases made through its social networking platform?
If not, Zynga.com will be competing with Facebook for social games revenue. In its S-1 filing, Facebook revealed that about 12% of its revenue comes from Zynga games purchases, about $445 million in 2011 alone. How much of that goes away if gamers are playing on Zynga.com instead of Facebook?