Facebook Makes a Deal with App Maker Zynga
Zynga has made some of the most popular apps on Facebook, such as FarmVille with its 75M users. With a total of 239 million monthly active users of their apps, Zynga has a significant proportion of Facebook users hooked. But they just about got unhooked: Zynga and Facebook were in a tense face-off over Facebook’s currency and the site’s cut.
Facebook is moving wholly to the Facebook Credits system, with the network taking a 30% of transactions with apps. A new agreement, announced today, has averted the war. The two companies have finally realized that they are interdependent, though I daresay Zynga needs FB a bit more than FB needs Zynga.
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 to sustain its apps. Zynga’s apps keep Facebook users coming back—though they’re just one of many things people sign onto the network for. The terms of the agreement have not been disclosed, but with Facebook on the high ground, I assume they are still taking a significant cut of the Facebook Credit transactions within the apps.
Zynga had already FarmVille.com, which links back to the Facebook app for its most popular game on the social network. However, it also had plans to launch Zynga Live, which could’ve been an independent gaming site—which suggests that the relationship between Zynga and FB was already strained. The agreement, however, has cemented their relationship for the next five years.
What do you think? Who do you think will come out on top from the deal?