Zynga's Facebook Status Changed to It's Complicated
posted Saturday Dec 1, 2012 by Scott Ertz
Dating back to the negotiations for bigger cuts on Facebook Credits, Zynga and Facebook have been losing that special feeling they once had. While they have created new games, some with negative results, Zynga has shopped their concept around. They worked a deal with Google, as well as preparing for a post-Facebook world, built their own platform.
Being in a lot of places might not be enough for them, though, as this week the partnership terms between Facebook and Zynga have changed. Until now, Zynga was required to build some exclusive titles for Facebook, as well as provide their titles for the platform. That is no longer the case, and that could mean titles like FarmVille showing up on other networks, like Google+ or the new Myspace. That could be a big transition for the company, especially considering without Facebook, Zynga would never have existed. The change also drops the requirement for Zynga to advertise for Facebook everywhere - good deal for Zynga there.
The other side of the deal is the Facebook can also start producing its own games. Until now, the agreement had been that Zynga would kind of be the game studio of Facebook, but now Facebook, with all of its vast, dwindling resources, can begin to compete against Zynga, EA and any other studio producing games for the platform. This here is the part that is most concerning to Zynga, as well as the other studios. Facebook has never been good about equality, so you can bet you'll see a lot more advertising for their own games than other companies' titles. So long as they prepare by reading about Google's less-than-successful adventure in the same space.
The negative impacts of this deal, outside of the obvious potential loss of active users, showed up in the place we have all come to expect: Zynga's stock. In fact, after this announcement, the company's stock, which has not been doing well in the first place, dropped another 7%. Add that to their losses and staff firings, it paints a pretty bleak picture for investors. Just because the stock price falls, however, doesn't mean the company is exactly in trouble - it just means investors are doubtful of the company's decisions. It doesn't exactly provide any hurdles today, but it will if they need another round of funding, which they probably do if they had to lay off employees.
All-in-all, this is not necessarily a bad thing for Zynga - they could find success in Google+ or Myspace, they could find success in their own platform, or they could begin to focus on their OMGPOP brand and go mobile. Honestly, though, even if Zynga vanished tonight, would people really miss them? Let us know your thoughts.
