GamesBeat

Zynga and Facebook step back from the brink of nuclear war

Defusing a tense equivalent of a nuclear standoff in social games, Facebook and Zynga announced today that they have entered into a five-year strategic relationship that ensures mutual support for social gaming on the world’s largest social network.

Under the agreement, Zynga will expand its use of Facebook’s virtual currency known as Facebook Credits. The companies were fighting about that because Facebook wants to make the currency a universal way to pay for virtual goods in apps across Facebook — and because Facebook wants a 30 percent cut of every transaction made with Facebook Credits. The companies have stepped back from the brink from what might have been a bad war for both of them.

It remains to be seen if Zynga got a discount on that, as Zynga is the largest app maker on Facebook and it has more than 239 million monthly active users on Facebook, or roughly half of all Facebook users. Zynga also has the biggest game on the social network, FarmVille, with more than 75 million monthly active users, according to AppData. Terms of the deal were not disclosed.

Both Mark Pincus, chief executive of Zynga, and Sheryl Sandberg, chief operating officer of Facebook, issued statements saying how the companies look forward to working together on behalf of users. The deal shows that both companies realize that to go to war against the other would be a case of mutually assured destruction. Both are dependent on each other, in a classic scenario of a platform owner and a major application maker.

Zynga needs Facebook’s nearly 500 million users, and it depends on spreading its games through word-of-mouth virality on the social network as friends encourage each other to play games. Facebook depends on Zynga to keep users coming back, as games are the most popular thing on the platform, and because Zynga is one of Facebook’s biggest advertisers. Zynga was making moves that suggested the relationship was getting sour because of Facebook’s changes to the platform, which caused virality to drop and forced Zynga to advertise more, which put more money in Facebook’s pockets.

Zynga went so far as to create FarmVille.com and was planning to launch Zynga Live, a web site that would have taken Zynga’s game to a Zynga-owned network. Ostensibly, Zynga may not do that now, or it may not be in a rush to do it.


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Trackbacks

  1. [...] Last year, both companies were in a nuclear standoff over Facebook’s demand that Zynga, as well as other social gaming companies, use its Credits virtual currency exclusively. Just like with Apple’s App Store, Facebook gets a 30 percent cut from Credits transactions. Zynga went as far as to build a separate site, dubbed Zynga Live, that would house its games if its relationship with Facebook fell apart. Luckily, the companies avoided all out war, and eventually entered into a five-year “strategic relationship.” [...]

  2. [...] on Facebook—a sometimes contentious relationship that was apparently resolved last year, when Zynga agreed to use the Facebook Credits currency in its game. That agreement expires in 2015, and Zynga says, “Any deterioration in our [...]

  3. [...] Wars con unos 10 millones. Además, se calcula que su base de usuarios puede estar cerca de los 250 millones. La empresa, que cuenta con unos 2.000 empleados, tiene dos fuentes principales de ingresos, la [...]

  4. [...] whose reign arguably began in 2010, when its traffic surged past Google’s and it bullied Zynga, its biggest partner, into accepting Facebook [...]

  5. [...] whose reign arguably began in 2010, when its traffic surged past Google’s and it bullied Zynga, its biggest partner, into accepting Facebook [...]

  6. [...] whose reign arguably began in 2010, when its traffic surged past Google’s and it bullied Zynga, its biggest partner, into accepting Facebook [...]

  7. [...] now Facebook, whose reign arguably began in 2010, when its traffic surged past Google's and it bullied Zynga, its biggest partner, into accepting Facebook [...]

  8. [...] whose reign arguably began in 2010, when its traffic surged past Google’s and it bullied Zynga, its biggest partner, into accepting Facebook [...]

  9. [...] Facebook, whose reign arguably began in 2010, when its traffic surged past Google’s and it bullied Zynga, its biggest partner, into accepting Facebook [...]

  10. [...] Facebook, whose reign arguably began in 2010, when its traffic surged past Google’s and it bullied Zynga, its biggest partner, into accepting Facebook [...]

  11. [...] Facebook, whose reign arguably began in 2010, when its traffic surged past Google’s and it bullied Zynga, its biggest partner, into accepting Facebook [...]

  12. […] 5 月就打得不可开交,互相威胁要离开对方。最后两家达成一项协议,Zynga 后退一步,接受了 Facebook 虚拟货币 Facebook Credits,从此 Facebook 可以从 […]

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