It seems like every week, Facebook acquires a company or is rumored to do so. This time, a report surfaced over the weekend, saying that Facebook could buy Zynga, now that the stock price of the popular game developer has fallen far enough. However, Business Insider says, “Not so fast.”
A writer for stock market blog Seeking Alpha, Mike Stallings, says it would make sense for Facebook to purchase Zynga, especially since the price has come down considerably. The report also got picked up by an NBC news site in the San Francisco Bay area.
Facebook and Zynga have long beed tied together, and some saw Zynga’s poor second-quarter showing as a harbinger of Facebook’s decline. But Stallings feels that by purchasing Zynga, the relationship could be strengthened on both ends. He pointed out that Zynga’s price is low enough for Facebook to afford, and once the company is officially part of the social network’s family, Facebook could promote and feature Zynga games. It would also send a message that Facebook is still a viable company.
But the fact remains that now rather than later, Facebook should take a serious look at acquiring its partner and then adapt its pages to be Zynga-friendly. Remember, this is a company that generated moe than $1.1 billion last year, and had revenues of $330 million this past quarter (up 19 percent year-over-year). The question is: Can Facebook make that even profitable by having it under its wing? I cannot see how it cannot, if it rescues the ship before it is completely sunk.
Business Insider posted Monday morning that just because Facebook has the means to acquire Zynga doesn’t mean that it will. Matt Lynley notes that the crux of this matter is based on a conspiracy theory, that Facebook changed its algorithm to feature newer games (not the time-tested popular Zynga ones such as Words with Friends and FarmVille).
It just doesn’t make sense for Facebook to spend money buying a company that makes Facebook games, because it already gets money from every gaming company on the platform. Facebook charges a 30 percent fee for every transaction, whether it’s on a Zynga game or any other company.
Buying a big company like Zynga would be a huge risk. If Facebook were to buy Zynga and a new gaming company like Kixeye suddenly shot to the top of the charts, Facebook would be caught flat-footed.
Facebook would benefit the most by doing what it has always done — working with whichever companies are popular at the time — given the short shelf life of Facebook games.
Readers: If you were in Facebook’s position, would you purchase Zynga?
Image courtesy of AllThingsD.