A recent U.S. Securities and Exchange Commission filing has revealed that world renowned social networking website, Facebook and their largest social game service provider, Zynga had decided to bring about major changes to the agreement between them, which both parties signed two years ago.
As a result of this filing, Zynga will no longer be able to keep its prestigious and privileged place within Facebook’s platform and the game providing service will now have to adhere to the same general terms and conditions that apply to all other app developers that work with Facebook. The new agreement will become effective in March 2013 after which Zynga will have to find another platform, if they want to host their games, while Facebook can make their own games.
Aside from this, once the new agreement come into place, Zynga will not need to use the Facebook payment system or ad units over the other gaming websites.
This new agreement has more negative effects on Zynga as opposed to positive ones, the biggest of which may be public perception. The news saw the gaming company’s shares price down 7 percent after this announcement was made.
Zynga’s share performance has been tepid at best all year as the company has seen less demand and use for their games on Facebook. This seemingly has led Mark Zuckerberg and company to quickly decide to alter the agreement between them, as in contrast other game developers on Facebook’s platform were doing better.
As Mark Zuckerberg himself told during an interview that, “our payments revenue from Zynga decreased by 20 percent this quarter compared to last year. But the interesting thing is that the rest of the games ecosystem has actually been growing. Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the last year.”
Now Zynga will move on and lay emphasis on its mobile games, as this service will not be relying on Facebook with the effect of this new agreement.
Source: BusinessInsider, Wired
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