Zynga stock plummets amid new Facebook deal
The Zynga logo is displayed on the front of the company’s former headquarters on December 9, 2011 in San Francisco, California.
Zynga shares plummeted more than 10 percent after the game maker and Facebook revised their 2-year-old agreement, now treating Zynga with the same rules as it applies to all other game developers.
Most importantly, these new terms prevent Zynga from driving gamers from Facebook to Zynga.com. This rule, the same as Facebook applies to other game developers, ensures that Facebook retains those gamers — and the revenue that comes along with them.
The new rules also free up Facebook to develop its own games, but a Facebook spokesperson tells me “We’re not in the business of building games and we have no plans to do so.”
Zynga says this provides more flexibility as it grows its own gaming network — Zynga.com — and looks to diversify away from Facebook and into mobile games. Now Zynga is no longer obligated to display Facebook ads or use Facebook credits on Zynga game credits.
Bottom line: Zynga wants to build an independent gaming network. And Facebook has seen *other* game developers thrive, so it’s not under pressure to give Zynga preferential treatment. So to use a relationship analogy — Facebook and Zynga aren’t breaking up, they’re still in a relationship, but it’s not exclusive and Zynga has the option to see other people.
Facebook gave CNBC a statement explaining the changes, saying: "We have streamlined our terms with Zynga so that Zynga.com's use of Facebook Platform is governed by the same policies as the rest of the ecosystem. We will continue to work with Zynga, just as we do with developers of all sizes, to build great experiences for people playing social games through Facebook."
Zynga’s Chief Revenue Officer, Barry Cottle, issued this statement: “Zynga’s mission is to connect the world through games. In order to do this, Zynga is focused on building enduring relationships with consumers across all platforms from Facebook and Zynga.com on the web to tablets and mobile. Our amended agreement with Facebook continues our long and successful partnership while also allowing us the flexibility to ensure the universal availability of our products and services.”
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