Zynga, the company that made its fortune offering games through Facebook, has agreed to change its deal with the social network. It gives Zynga more freedoms but also means giving up several key benefits.
The two companies have been extremely interdependent to date. Most of Zynga’s income has come from attracting paying players for Farmville and other Facebook games, helping it reach annual revenues of more than a billion dollars. Meanwhile Facebook relied on its cut from such sales for the vast majority of its non-advertising revenues.
A revised deal between the two has just come to light in a Zynga regulatory filing. It doesn’t detail who initiated the new agreement. The changes appear to stem from Zynga setting up its own game platform outside of Facebook.
Among the points in the agreement, which takes effect on 31 March:
- Zynga no longer has to use Facebook Credits (a virtual currency) for player transactions outside of Facebook.
- Most games Zynga offers on its own platform must also be offered on Facebook.
- Facebook is confirmed as allowed to develop its own games (though there’s no sign of it doing so.)
- People playing on the Zynga platform won’t be able to automatically share their progress on Facebook (likely to the relief of friends and family.)
- Zynga won’t be able to promote its own platform on Facebook.
- Zynga will no longer have to advertise Facebook on its own platform.
According to Facebook, the changes mean Zynga is now largely under the same rules that cover all the other developers and game studios that work with it.
On the face of it, the loosened relationship is more of a worry for Zynga than Facebook. At the moment around 13 percent of Facebook’s revenue stems from Zynga games on the site, but the games make up 80 percent of Zynga’s total takings.
The news may explain last month’s announcement of planned and possible cutbacks in Zynga, including the closure of a studio in Boston.