Zynga and Facebook scrap partnership deal
Zynga is loosening its ties with Facebook, opening the possibility that Facebook could start developing its own games.
The agreement between the two companies was originally signed in 2010, and was intended to last for five years. Now, though, according to documents filed with the Securities and Exchange Commission, Zynga will deal with Facebook on the same basis as other developers.
It will no longer have to display Facebook ads on its site or use Facebook credits, and will be free to develop for other platforms. On the downside, though, it won't be able to place its own ads within its games on Facebook.
It's not clear which of the two companies initiated the changes, but they mark a big risk for Zynga. The company receives a whopping 80 percent of its revenues from Facebook. Certainly, the markets weren't keen on the new arrangement, with Zynga shares falling 13 percent in the wake of the announcement.
But Facebook is also pretty reliant on Zynga, which accounts for around 15 percent of its own income, and it's clear the company wants to reduce that dependence.
Also contained in Zynga's filing is the statement that: "Effective on March 31, 2013, certain provisions related to web and mobile growth targets and schedules will no longer be applicable and Facebook will no longer be prohibited from developing its own games."
Of course this doesn't mean it will do any such thing, and it's a possibility that isn't mentioned in Facebook's own filing. Indeed, the company tells the Financial Times that it has no plans to do so. It's made it clear, though, that it wants to be less dependent on Zynga for games.