Zynga is strategically placed for performance connecting to Facebook’s data centers. Facebook is a platform for developers and Newsweek covers some of the dynamics and Green (money) in data center ecosystems.
The tense ‘friendship’ between Facebook and its biggest game developer.
Photos: Facebook's Most Addictive Social Games
Part of the lore around Facebook is that Mark Zuckerberg, its 26-year-old founder, does not care about money. But for a guy who doesn’t care about money he is awfully good at squeezing it out of his business partners. Over the past two years, Facebook has evolved from a social-networking site into something much bigger: it has become a huge online arcade where each month more than 200 million people play videogames that run as applications on top of Facebook.
San Francisco–based Zynga, the biggest Facebook game developer, has become a software powerhouse in its own right, generating an estimated $500 million in revenue this year by selling virtual goods to people hooked on its games, which include FarmVille and Mafia Wars. (Zynga won’t comment on revenue projections.) There’s no cost to play the games, but if you want to jump ahead faster, you can spend real money on virtual goods.
Facebook is collecting green/revenue from Zynga via advertising.
As soon as Zynga began to boom, Facebook began to put on the squeeze. Earlier this year Facebook stopped letting apps makers like Zynga promote their games by sending notifications to users. The new policy was great for users, who were sick of being bombarded with promos about games. It was also great for Facebook, because by depriving game makers of their free promos, it pushed them to spend more on buying advertising space from Facebook.
and Facebook credits.
The next and bigger challenge came when Facebook introduced Facebook Credits and indicated it would eventually require all partners to use them. That move led to tension between Zynga and Facebook. But this past May, after some haggling, the two companies struck a five-year deal in which Zynga agreed to use Facebook Credits.
Facebook is a channel to end users. Amazon has their channel. Google has their channel. Monetizing access to users is a platform play. Microsoft’s Windows was one of the biggest platform plays. Doesn’t this sound like a description of the old Microsoft.
The fact is, Zynga had no choice. TechCrunch editor Michael Arrington claimed Facebook had developers in a “Darth Vader death grip,” and described the situation between Facebook and game makers this way: “Imagine a 400-pound bully strangling another kid while simultaneously rummaging through his pockets for lunch money. And he’s speaking quite calmly the whole time about what great friends they still are.”