Building a business is expensive, so in order to keep moving forward in the game, you need a source of income.
You can choose to get funds from big investor who will let you do what you want but you can’t reveal his name.
You can hitch your wagon to the great and powerful Facebook who will bring you notoriety and billions of players as long as you abide by their rules at all times.
Which one would you chose?
Zynga, the company that brought the world FarmVille and Words With Friends, chose door number two, but now things are changing. Where Zynga used to be that little company that designs Facebook games, they’re now a force to be reckoned with in the gaming world and they want more control over their product.
To do this, they’ve amended their agreement with Facebook so they can offer their games on their own platform. Even bigger, they don’t have to display Facebook ads on their pages or take Facebook credits in their games.
The downside is that the agreement allows Facebook to create their own games for the site. The Wall Street Journal published a quote from Facebook that states, they’re not in the game business and have no plans to do so. Maybe so, but that doesn’t mean they won’t become special friends with another up and coming game maker who will be happy to play by their rules.
This seems like a good move for Zynga, but the announcement caused their stock price to drop 12%. According to WSJ, Zynga recently reported a $52.7 million loss for their last quarter, so they can’t afford to take any more hits.
When I first read the number, I was shocked. I had no idea that this brilliant company was floundering. But the gaming environment on Facebook has changed. There’s more competition now and gaming isn’t the huge trend that it was just a year ago. Back then, my newsfeed was loaded with FarmVille updates but now, not so much. I gave up playing there in favor of games on my iPad. They’re portable, they run smoother and I don’t have to deal with all the clutter.
I think Zynga made the right move with this amended agreement. It might hurt them at first, but they should be able to make up the loss by expanding into areas they couldn’t before. Mobile is where the money is and there’s no reason why Zynga can’t be a driving force in that area.
Good luck! I’m rooting for you.