Zynga and Facebook Love Each Other (For 5 More Years)

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Facebook and Zynga announced Tuesday that they have agreed to a five-year "strategic relationship" that will expand the use of Facebook Credits in Zynga's games. So much for the rumors that Zynga was planning to go rogue and launch its own social gaming site.

The rumors, which were first reported by TechCrunch earlier this month, suggested that Zynga CEO Mark Pincus had announced the unveiling of a new social gaming site called Zynga Live.

Online game developer Zynga has been at odds with social networking giant Facebook for several weeks now--conflict most significantly arose when Facebook changed its developer platform to the disadvantage of companies such as Zynga.

A major change was the introduction of Facebook Credits, a virtual currency that Facebook now requires its developers to use. The issue with Facebook Credits, of course, is that Facebook takes a significant cut of the revenue--30 percent. It is not yet mandatory for developers to use Facebook Credits, but rumor has it that it soon will be.

Unnamed TechCrunch sources reported that Facebook and Zynga were trying for a long-term relationship--but that negotiations weren't going too well, hence Zynga's preparation for a complete move off of the social networking site. According to sources, during the negotiation period Facebook pulled some underhanded tricks, such as shutting down notifications from some of Zynga's games and threatening to remove Zynga's games from Facebook completely.

However, it looks like everything is hunky-dory--the official word on the street is that everything is fine (a step up from "intense," a couple of weeks ago), and that this is a long-term, strategic relationship.

"We are pleased to enter into a new agreement with Zynga to enhance the experience for Facebook users who play Zynga games," says Facebook COO Sheryl Sandberg.

Of course they're "pleased"--Zynga is the manufacturer of several of the most popular games on Facebook (including Farmville and Mafia Wars), and Zynga apps on Facebook have about 230 million users--over half of Facebook's worldwide count of 400 million users.

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