I don’t own Zynga. I haven’t told any clients to buy Zynga. And, I’m terribly delinquent in all of my Words with Friends games.
But when I see something like this juicy stat pass by on Twitter — and from Kara Swisher no less, I can’t help but think: why wouldn’t Facebook buy Zynga? What’s the downside? Antitrust holdup? Hardly. No game makers are going to want to work with Facebook as a result? Really?
So, why not take that infrastructure & improve margins on 15% of your revenue, pretty much instantly? Especially before Facebook Credits effort takes hold? Am I missing something here?
In the first quarter, Facebook said Zynga made up 15 percent of the social network’s revenue, from both advertising and the sale of virtual goods. In comparison, Facebook estimated Zynga contributed 19 percent of its revenues for all of 2011.
As it stands today, the two companies are an inseparable pair. Zynga is Facebook’s largest partner and Facebook is where Zynga attracts most of its user base.
Facebook is able to generate revenue from Zynga three ways: Processing fees generated from the sale of virtual goods using Facebook Credits; third-party advertising on pages generated by Zynga’s games; and direct advertising from Zynga.
On the surface, it looks like Facebook is becoming less reliant upon Zynga. But Facebook did not explain why Zynga’s portion of the pie fell this quarter, and it’s hard to compare one quarter to a full year of results.
Facebook did warn that Zynga recently launched games on its own Web site, and that it could choose to try to migrate users from Facebook to its own platform. “We may fail to maintain good relations with Zynga or Zynga may decide to reduce or cease its investments in games on the Facebook Platform. If the use of Zynga games on our Platform declines for these or other reasons, our financial results may be adversely affected,” Facebook wrote in its update IPO filing.
Source: All Things D, WSJ