Today’s S-1 filing revealed that Facebook generates approximately $550 million annually through Credits, $375 million of which can be attributed to Zynga.
Additionally, Zynga accounts for a whopping 12 percent of Facebook’s revenue.
Thanks to the filing, Zynga’s stock soared close to five percent in after hours trading.
While Facebook’s revenue streams are sufficiently diversified, it appears that the company is extremely dependent on Zynga when it comes to Facebook Credits.
Many have speculated over the past few years how big of an impact Facebook Credits would have on the overall ecosystem, but today’s filing shed some light on the state of the platform and the virtual goods ecosystem.
Of Facebook’s $550 million in Credits revenue, approximately 68 percent was generated from Zynga, based on our estimates.
The other revenue attributed to Zynga came from display advertising buys which would amount to around $70 million.
It also results in an estimated revenue for Zynga of approximately $1.3 billion for the year. For the past few years, developers have suggested that Credits would be a huge opportunity for all developers, opening up new markets, but so far, it appears to simply be a tax on social games.
It will be interesting to see how this relationship evolves over the coming years. As Facebook discloses in filings, Zynga also accounts for a large percentage of Facebook’s overall ad impressions. If the relationship turned sour, we could see Facebook lose upwards of $500 million annually (and possibly more if growth sustains).
What’s also not clear is the percentage of impressions attributable to the entire Facebook platform, a number that would give us some insight as to the importance of the platform as whole. Zynga would also obviously like to eliminate the tax on its apps.
The tax has served as a significant source of tension between the two companies over the past couple years. It also has potentially prevented other verticals from exploding on Facebook, since newcomers could be concerned about Facebook’s taxes.
What also isn’t clear is whether or not Facebook will try to make money from the new open graph actions, which has resulted in over five billion shares on the site.