Facebook Backs Zynga As Game Developer Shrinks

By Justin Lafferty 

Despite a bleak third-quarter financial report from game developer Zynga, Facebook still believes the company can rebound. After Co-Founder and CEO Mark Zuckerberg noted that the company’s revenue from Zynga has dipped 20 percent, a Facebook representative told select members of the media Thursday that the social network still has faith in the struggling game maker.

Zynga, the leading creator of Facebook games, is going through a rough economic patch. The company laid off more than 100 employees and will close its Boston office, with more closures possibly on the way. Zynga will also phase out 13 games. While no list has been announced, the sleuths at sister site Inside Social Games examined Zynga’s worst-performing games, exploring possibilities for sunsetting.

On Thursday, a few reporters were invited to Facebook headquarters in Menlo Park, Calif., for an informal talk about social games. Facebook representatives were asked to clarify Zuckerberg’s comment during the third-quarter report that while the games ecosystem as a whole is healthy, he’s not quite happy with the level where it is currently:

Overall, gaming on Facebook isn’t doing as well as I’d like, but the reality is that there are actually two different stories playing out here. On the one hand, our payments revenue from Zynga decreased by 20 percent this quarter compared to last year. But the interesting thing is that the rest of the games ecosystem has actually been growing. Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the past year since payments has been adopted. This evolution is pretty encouraging.

Sean Ryan, Facebook’s director of games partnerships, spoke out in support of Zynga:

Zynga will come back. They’ve got great games; they’re a great partner for us.

Facebook Director of Growth Alex Schultz noted that Zuckerberg’s comment was more of a motivational tactic than a criticism of the gaming industry.

Readers: Do you think Zynga will bounce back anytime soon?