Zynga has had an extremely lucrative partnership with Facebook and it was revealed that Zynga accounted for 12% of their revenue when Facebook filed for its IPO. Their relationship wasn't always as pleasant as a sunshine-filled day on the farm, however. Back in May 2005 Zynga wasn't happy with Facebook taking 30% of their revenue and it prompted some uneasy negotiations that ended up in Zynga reaching out to other potential partners.
It also prompted Zynga to start developing games that were independent of Facebook and, within a few months after their Facebook fight, they had managed to churn out a few games on their own. They also managed to become a public company and have invested hundreds of millions of dollars into their own server farms in order to transition from Amazon services. Their goal here is to take Zynga.com and turn it into their own platform where they can carve out their own territory. According to CEO Mark Pincus,
We want to grow the market for everyone. Our vision is a billion people playing together.
That's not the whole story though. Read on after the break to find out what else Zynga has in mind to make their vision a reality.
One thing Zynga can do for everyone who only plays social games casually is eliminate the major annoyance of being bombarded by constant notifications about Farmville cows in your news feed but it can also provide something useful for game developers as well. Zynga.com will give developers of third-party games access to a huge customer-base of approximately 240 million and provide them with a framework to develop and grow their games through Zynga. In return, Zynga will take a cut off the top. The exact amount isn't public yet but this does potentially present developers with a lofty decision. If they wanted to participate with both Zynga.com and Facebook they would be looking at losing a significant portion of revenue. The CEO of Mob Science, Michael Witz, says that it could be worth participating in both due to the offset in costs and ability to focus on development instead of marketing.
Going it alone on Facebook is a very risky proposition. We would need a lot of capital to acquire customers, and spreading virally on Facebook is really difficult. Instead we are going to spend our time creating the game and let Zynga use its incredible institutional knowledge about what makes a game successful.
The question then becomes, is he right? What do you think?