Zynga.com is no longer an extension of the Facebook platform, according to an SEC document filed today.
Originally, Zynga’s games platform featured an extremely deep integration with the Facebook platform that appeared to be born of the developer’s privileged relationship with Facebook. Zynga.com previously supported Facebook ads and Facebook payments in a deal unlike anything any other developer had enjoyed. As of March 2013, however, Zynga is relegated to using the standard terms of service that every other developer agrees to when integrating Facebook with their own sites.
Here are the cons: Zynga is losing some (but not all) of its exclusivity with Facebook. As the developer struggles with falling stock prices and decreasing returns on investment in blockbuster social games, losing some protection from Facebook might cause stock to dip even lower. Zynga closed today at $2.62 and is now at $2.35 in after-hours trading.
Effective on March 31, 2013, Facebook will no longer guarantee Zynga certain web or mobile growth targets in exchange for continuing to invest in games on the platform.
Also with the new agreement, Facebook will no longer be prohibited from developing its own games, however, it’s unlikely that the social network would get into the game development business any time in the near future. The company has generally taken the position of being a platform rather than producing its own content.
“We’re not in the business of building games and we have no plans to do so,” a Facebook spokesperson said. “We’re focused on being the platform where games and apps are built.”
Here are the pros: Zynga can now feature, cross-promote and launch just about whatever game it wants on Zynga.com — even real money gambling games. Third-party games no longer need to be available on Facebook before hitting Zynga.com and Zynga can redirect players to mobile titles at its own discretion. Even better, Facebook’s standard terms of service allow Zynga to use Facebook data collected from mobile titles (e.g. email addresses), so it’s not as though Zynga is cut off from Facebook, even if it is less privileged than it was a year ago.
The amendment is also careful to state that any games launched on Zynga.com will “generally” be available on Facebook, though not in cases where the game is mobile-only or available in regions where Facebook isn’t allowed (China). If Facebook opens up its platform to real money gambling, Zynga plans to launch its real money games on the platform after the fact. Additionally, if Zynga buys any social game that was on Zynga.com but not on Facebook prior to the buy, Zynga plans to bring the game to Facebook after closing the acquisition.
Facebook provided the following statement in response to Zynga’s updated SEC filing:
“We have streamlined our terms with Zynga so that Zynga.com’s use of Facebook Platform is governed by the same policies as the rest of the ecosystem. We will continue to work with Zynga, just as we do with developers of all sizes, to build great experiences for people playing social games through Facebook.”
Zynga chief revenue officer Barry Cottle made the following statement:
“Zynga’s mission is to connect the world through games. In order to do this, Zynga is focused on building enduring relationships with consumers across all platforms from Facebook and Zynga.com on the web to tablets and mobile. Our amended agreement with Facebook continues our long and successful partnership while also allowing us the flexibility to ensure the universal availability of our products and services.”