Defriend: Facebook and Zygna break gaming development ties
Zynga shares fell 11% to $2.34 hours after the news came out. Facebook shares were down more than 1% at $26.98.
Under the new agreement, Zynga users will no longer need to use Facebook to register or login to play online.In a similar change, Facebook said it will be able to develop its own games, which it previously was prohibited from doing.
So far Facebook itself says it´s not going to focus on games development. “We’re not in the business of building games and we have no plans to do so,” Bloomberg quoted a representative from the firms California HQ at Menlo Park, adding “We’re focused on being the platform where games and apps are built.”
But even if Facebook stays away from the business, the new agreement could squeeze the market further for Zygna – a symptom the game developer has been suffering from.Other game makers could achieve firmer grounds more quickly via the world known Facebook platform.
With this agreement Zynga aims to promote its own website Zynga.com, which would give it more freedom in placing ads and selling virtual goods. The online games developer earns about 80% of its revenue by selling virtual goods in games played on Facebook. This came at a cost of 30% of Zynga sales, as Facebook obliged to use its exclusive Payment System for any settlements and charged the fee. The amended agreement eliminates this Zynga tie to the Facebook payment facility.
Zynga has recently been showing signs of financiall trouble.Its 3Q 2012 loss nosedived to $52.7mn from the net profit of $12.5mn, a year earlier.
In a bid to tackle the problem, last month Zynga announced the company’s restructuring. The latter involves a minimum 5% staff cut, or leaving about 150 people without a job, as well as closures to its office in Boston and maybe in Japan and the UK. On top of that, Zynga said it was going to stop developing about 13 of its games, though it didn’t give any further details.