Facebook and Zynga Battle Over Credits — and Bigger Platform Issues

The relationship between Facebook and the largest social gaming company on its platform, Zynga, has fallen to an all-time low, or so industry sources are telling us.

Zynga had an all-hands meeting last Thursday, where chief executive Mark Pincus told his hundreds of employees that the company might leave Facebook’s developer platform. Instead, it might launch its own social gaming service, called Zynga Live or (ZLive), as TechCrunch then VentureBeat reported.

One big reason may be money. Zynga has built a business worth hundreds of millions of dollars, largely monetizing through virtual goods that it sells in its games. Facebook now wants to take a 30% cut of this money directly out of Zynga’s pocket by forcing use of its Credits virtual currency — although Zynga could eventually reap benefits from this arrangement.

However, everyone we’ve spoken has described the issues between the two companies as being about more than just Credits. Some also say that the conflict is representative of larger issues on the platform. We’ve gathered more details, but here’s context first.

Industry Turmoil

Facebook is starting to make all of its developers use its Credits virtual currency. All other things being equal, this means Facebook will get revenue that developers have been getting up until this point. However, Facebook says that everyone can benefit through Credits.

We covered the issues in more detail in our Inside Facebook Gold membership service, last week. To recap, if Facebook’s various efforts to improve Credits work — like more payment purchase options, better user access within its core interface, liquidity due to broader usage, etc — then developers could see drastic increases in the number of paying users and the amount they pay, and thereby make more money.

The problem is that nobody knows how Credits will actually work.

Meanwhile,  Zynga has already built its own payments system, and it typically pays a much lower portion of its revenue to service provider partners, including Paypal, Offerpal, and others. No matter how well Credits eventually work, Zynga is likely to bear a big part of the cost in the meantime.

It has 243 million non deduplicated monthly active users and 60 million daily active users, by far the most out of any developer on the platform, according to our independent AppData measurement service. It is likely going to make hundreds of millions of dollars in revenue this year.

Zynga may also feel misled about Credits, and other platform changes. Like many developers, the company built its business on Facebook over the past several years with the understanding that it would be able to retain all of the revenue, based on statements made by Facebook when the social network launched its developer platform in 2007. Zynga also planned its games around specific parts of the user interface, like notifications and requests.

Beyond making Credits mandatory, Facebook removed third party access to notifications at the beginning of March and it is planning to mostly remove requests, as soon as this month. Organic growth is next to nothing now, according to many developers. Most of the biggest games are losing users, according to what our data shows.

Zynga has had one big hit this year, Treasure Isle. The title has grown through advertising and cross-promotion within its other games, as far as we’ve been able to tell. Facebook wants developers to reach its users through its news feeds, the email addresses that apps can request directly from users, or through the counters that appear in the game and app dashboards on the home page.

None of these channels are currently helping social games reach and engage with users.

Most users read their feeds in the algorithmic “Top News” view, which shows users only 50 items per day; given all of the status updates, photos, shared links from the web and whatever else they see — and the preference the algorithm gives these other types of stories — games don’t have much room to get noticed. Email has all the problems that it does in real life, such as messages ending up unread or in the spam folder. The dashboards and counters, meanwhile, just aren’t getting significant engagement, even though Facebook wants them to.

Of course, the reason that Facebook took away communication channels like notifications and requests is that many  developers (Zynga included) relentlessly messaged users through them, to the point that the channels became choked with communication that seemed more like spam. So, between Credits and the communication changes, Facebook has reduced the value that Zynga and other developers can get out of the platform — at least for the present. These are all things that any serious developer on the platform already knows painfully well.

While the current changes are severe, it is important to understand that Facebook has made changes throughout the history of the platform that have seemed just as severe at the time they happened, like when it removed app profile boxes from users’ personal profile pages, or made the news feed a raw stream of real-time updates… or changed it back to be algorithmic. For more on this sometimes-painful evolution, see our article from 2008: Facebook’s platform: rebuilding the plane in midflight.

Basically, some companies have suffered as each change has rolled out, yet the social app industry itself has grown along with Facebook.

The Issues Today

With every change over the years, some developers have said Facebook is doing a bait and switch, encouraging them to build for one set of rules then changing the rules on them in ways that hurts their businesses. Yet at every turn, it has also been clear that some developers have acted in bad faith, forcing Facebook to take action against them in ways that affect the whole ecosystem. How one views Facebook’s changes now or before depends on where one’s interests lie. Usually, developers get upset but deal with the changes.

But no developer has ever moved off Facebook’s platform, especially not one as big as Zynga. What’s the reason it might, now?

Zynga has also already established something of a presence off of Facebook; millions of people are playing FarmVille on the web site since it launched months ago, and it has been slowly expanding web versions for other games, like Mafia Wars.

But those games all have relied exclusively on Facebook’s platform, from user’s identities to communication channels. A break with Facebook would mean these aspects of its sites would be completely cut off.

Instead of Facebook’s social graph and communication channels, Zynga would apparently try to create its own. It has gathered users’ email addresses, as Facebook has encouraged developers to do. And it has been busy testing out text messaging in at least one of its big apps, Mafia Wars, so it has some phone numbers. These are two communication channels it can use beyond Facebook. And considering that there are relatively fewer other communications channels left on the service, these alternatives look more appealing than before.

ZLive would also have the immediate short-term benefit of not requiring Zynga to pay the Credits tax; although if Credits ends up working as Facebook intends, Zynga would miss out on any of the benefits.

The bigger issue is that the two companies seem to have a personal problem with each other. Zynga has had far more platform violations than any other developer on the platform, according to sources in the industry. The company is well known within the developer community to be very aggressive with everything: messaging users, monetizing, etc. We have long heard complaints about its business practices from other developers, and those issues appear to have come to a head with Facebook itself.

But how much worse is Zynga? It has so many big, full-featured games that the numeric volume of issues will naturally be higher. We also hear that it has been getting in less trouble than most other companies in recent months.

We have, meanwhile, also heard that Facebook is using strong-arm tactics to control developers, although sources have not been able to provide meaningful details about the tactics themselves.

The TechCrunch article suggests one way strong-arming might be happening:

To make matters worse, say sources, Facebook is trying to get Zynga to agree to a long term deal where Zynga remains primarily on the Facebook platform. During negotiations Facebook has taken some steps to punish Zynga, such as shutting off notifications for Farmville and other games, and Facebook has threatened, say multiple sources, to simply shut some of Zynga’s games down permanently.

This example is unlikely, as notifications were shut off for all developers at the beginning of March. But, as the platform owner, Facebook potentially has other tools at its disposal.

Facebook does regularly tweak some ways that apps reach users, such as friend invites — it has been doing this since the platform launched. We’ve heard reports from developers over the years that Facebook play favorites with features like invites. On the other hand, from our understanding, it does try to be fair, and generally we haven’t heard complaints from developers on this front in quite a while.

Whether fair or not, the problem here is that Facebook offers no transparency into how it handles negotiations with individual developers; perhaps the company turned down the number of friends that Zynga players could invite to their games, for example, but it’s not clear that it was due to negotiations versus other completely legitimate policy enforcement measures.

Because there’s no more specific information about what Zynga has done wrong, or how Facebook has handled negotiations with it and other developers, it would be a mistake to pass judgment on either company’s behavior just yet.

Conclusion: Is Zynga Bluffing?

If Zynga tries to leave Facebook, it will be embarking on a risky experiment — no social game developer has even tried to do anything similar on the scale that Zynga might. After all, the whole point of “social” in social games is that you build games that use the social graph and communication channels of a host social network. It could try to use other social graphs as identity providers and as communication channels, like those from MySpace, Twitter or even Google — but no competitors offer meaningful competition to Facebook at this point. Zynga just withdrew from Tagged, another social network it’s been on, as TechCrunch also spotted, in an early draft of a company note to users about moving to ZLive.

So it seems Zynga is trying to centralize all of its resources on ZLive, and trying to own the entire relationship with its users rather than relying on Facebook or any other identity service to help it reach users. This basically makes Zynga a casual game company. While it may have a lot of money, a big team, and users, it is essentially going up against big casual gaming companies that have already established themselves on the web. It will be playing on their turf. This seems like a big challenge, but  Zynga has actually gotten good at building games, as many of its competitors have come to grudgingly admit in the last year or so.

There are also serious questions for Facebook about how users will be impacted if all of Zynga’s games were to suddenly disappear from the platform. What about the users who have each spent hundreds of hours, if not hundreds of dollars, building up their farms, their mafias, their virtual aquariums, and the other core components of Zynga games?

Certainly, Zynga has had issues over the years, but it has also made products that millions of people love. Facebook itself could likely see traffic and engagement fall, at least in the short term, if Zynga’s games disappear. Lots of other developers are hungry to grow, and we expect they’d happily try to take Zynga’s Facebook user base. But are they able to create and operate as many high-quality games at the scale Zynga has already achieved?

A related point here is that because Facebook has curtailed developer-to-user communication — it’s not clear how competitors will reach the users they need to in order to fill the void. We don’t know how many Zynga game players overlap with rivals; millions have likely only played Zynga games, and don’t know about the others. Techniques like cross-promotion within other games may not work that well here.

Zynga is also paying Facebook millions of dollars for performance advertising every month. Rivals buy ad space to reach developers, but most lack Zynga’s budget. It’s possible that Zynga’s departure would reduce the cost of ads, helping rivals find users, and hurting Facebook’s revenue. But many non-game advertisers have moved on to the system, other developers may not be able to gain much of an edge here.

ZLive ultimately sounds like it could end up worse for Zynga than for Facebook, but a split is a gamble for both companies.

The more damaging part for Facebook here is if it is publicly seen as acting unfairly towards Zynga, in a way that undermines other developers’ interest in the platform. If most developers thinks they can’t create a business on Facebook without having the rules changed or unfairly enforced on them, then they might also leave.

That doesn’t just apply to social app developers, it applies to web publishers busy integrating its new social plugins around the web. Platform developers are generally hooked on being able to access Facebook’s traffic — many describe it as an “addiction” — and the plugins are now helping other sites get that same addiction. Mainstream media companies have already been reporting significant traffic from Facebook. In other words, the plugin users are making Facebook a more important part of their businesses.

But if companies on the rest of the web think that Facebook will treat them poorly, they might not add its features in order to avoid the same headaches Zynga is going through. Facebook is also dealing with fallout over how it has handled a user privacy around the plugins and a variety of other launches; critics say it has tricked users into revealing sensitive personal information, as we’ve just covered in detail over on Inside Facebook.

Zynga and Facebook are in a good position to hurt each other. As with mutually assured destruction in other realms of human conflict, we think they’ll look at the costs and benefits, and work out their differences — although probably in a way that serves Facebook more, given the company’s better leverage.

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60 Responses to “Facebook and Zynga Battle Over Credits — and Bigger Platform Issues”

  1. Cindy says:

    Given the popular negative sentiment against social games updates from FB users, it’ll be interesting if Zynga positions ZLive as the social games destination with access to the most active players and better monetary benefits for developers. While FB might not like the exodus, bet a lot of users will be happy they no longer get Mafia Wars requests for energy boosters.

  2. D Smith says:

    Please don’t try to defend Zynga. Facebook is no angel, but many of the heavy handed changes they’ve pushed have been a direct result of Zynga’s overuse and abuse of every single option to grow their userbase. Sure they’ve had fewer violations recently. A well fed lion is likely to cause less trouble than a hungry one.

    Pretty much everything Zynga has done has been good for them and bad for all the other developers on FB. And, no, Zlive is not a bluff. They’ve been planning this for at least a year. Hopefully the vacuum caused by their departure will be good for the space and for devs working on the next gen of games, and not just copying existing content.

  3. dandaman77 says:

    i play zinga’s games because they r free i play them on facebook because thats where it is and the reason i even visit facebook in the first place dont come to me for money youll take the interest away quickly ill find another one

  4. Amanda Ziva says:

    After playing Mafia Wars for 8 months, I would totally follow Zynga. I think it is BUNK that Facebook keeps changing everything and I am quite sick of it. My news feeds are crap, messaging works when it wants, and the facebook chat clutters EVERYTHING! I only use facebook to contact some family, to play mafia wars, and to accept gifts for Mafia Wars. Otherwise, I have Skype to communicate with my group for Mafia Wars. I say have at it, take Zynga away from Facebook. Bet they will grow bigger and will be enjoyed by all the major players in the games more then they are at this time.

  5. WC says:

    I signed up on Facebook just for the games. I almost never use it to contact my friends or share things with them. If Zynga leaves and creates a new gaming platform, and especially if they allow other developers to access that platform and promise more privacy than Facebook does, I’ll switch my gaming to them.

    As for Zynga abusing the features of Facebook, they encourage people to use them, but they don’t auto-post anything. Every single post is the result of a user WANTING to post something.

    Facebook knows what their users spend their time on. And I’m betting that the games are huge portion of that time. If they push away the games, they’re going to lose some of their user base. Possibly most of it.

    And other than the games, Facebook doesn’t provide anything that you can’t get somewhere else, better. Email is better for private communication, IM is better for instant communication, Twitter is better for status updates. Heck, Google Wave is better for sharing links, pics and videos.

    Not that Zynga won’t lose customers in the move, either, mind. But I’m guessing that keeping 30% of their profits is better than how many customers they’ll lose.

  6. Blogger Boy says:

    I will say I am disappointed at the lack of knowledge the writer of this article. Your name say’s “Inside Social Games” but how many games have you played socially on Facebook and more important how many Zynga games?

    Zynga has cloned each and every game or bought them from another company. They took the Microsoft approach and see something that is making money. They then have the capital to mass advertise and cross link it in Facebook games causing other developers time spent developing a product to be replicated. You can search this for yourself. Its not really that hard if you did the research.

    I will give you a small taste of what we can post on walls and why notifications were taken away. It wasn’t to punish the developers. It was to get some control over the site. Lets just look at Mafia Wars.

    Spam to post to your Facebook wall and this isn’t all.
    * You bought skills points share with your mafia
    * You leveled share with your mafia
    * You vaulted share with your mafia
    * You need help with a job NY share with your mafia
    * You need help with a job Cuba share with your mafia
    * You need help with a job Moscow share with your mafia
    * You need help with a job Bangkok share with your mafia
    * You found free stash share with your mafia
    * You need a burner share with your mafia
    * You played the lotto share with your mafia
    * You went to war share with your mafia
    * You iced someone share with your mafia
    * You hit listed someone share with your mafia
    * You took someone off the hit list share with your mafia
    * You helped with a war share with your mafia
    * ETC…

    Communication causing Zynga to lose people. This would also be a false statement. They have been losing people for months in many games. That information should have also been at your finger tips. We shall take into consideration this game was put into place after all the changes. The first few days of Treasure Island gained 9 Million users and eventually has seated itself at 27 Million in a month. Does that sound like Facebook policies are hurting games? There are other games that have also done well like Playdoms Tiki Resort with the new changes. I ask why does everyone blame Facebook for the games falling numbers?

    Here are examples of why Players have been leaving Zynga games.

    Here is an example of Yoville. This Saturday May 8th 2010 they had a big 1 day event. They even said we are creating items just for this day. Making people believe they wouldn’t be released in the game at any future time. Well just read the Yoville forums. People are more than upset at the bait and switch. People thought they were spending money on items that would have special meaning because they were limited edition items. They then released some of those items to be purchased this week.

    Mafia Wars poor thought out player upgrades.
    Latest example of a badly thought out scheme
    Animals

    You ask why?
    Well one if you chose the wrong faction you might not be able to collect certain animals.
    There are only 2 gift able ones so you cant help your mafia
    There are only 4 animals in total you can generate by doing jobs
    There is only 1 you can win fighting once again fighter accounts suffer with low energy

    What happens now?
    Well seems they are going to introduce Bangkok 6/7
    Sounds good though there are 100,000’s of people who cant complete 5B because it just keeps resetting. Do all those people suffer now?

    OK once Bangkok 6/7 are released what happens?
    Well since no Bangkok items drop from fighting once again the fighter accounts are the ones punished for having low energy.

    So they add animals back to drops in fighting. There are so many items that drop from fighting that the percentages of collecting them is very small per large amount of stamina.

    So now you might think I am being unreal, but now Imagine you spent a large amount of money being a fighter. Energy accounts normally spent little to nothing on the game. You take into consideration that the current animal introduction will be around +21,000 attack to your inventory stats and 24,0000 defend to inventory stats.

    You now take a weak energy account and add those kind of stats and you made skill points worth less, you made RP items worth less, and you once again with all the other changes to cater to the energy accounts. You keep that spirit alive.

    That leads to only 1 conclusion. They know fighter accounts normally spend the largest amount of money in the game. So if they beef up energy accounts stats and they start beating the fighter accounts. That means fighter accounts have to spend more money.

    I do understand this isn’t free, but these kind of poorly thought out antics are what causes people who have spent money to just walk away. This is just 1 of many instances where this has happened. It is the latest one and the one everyone can most relate too.

    So to the article writer of this site. Wouldn’t you better served that instead of writing out pretty text. That covers a story that Zynga wants to get out. To post what your name implies. The way I see it you don’t know a lot about social games or the dynamics of how they work. You don’t even understand the tactics that Zynga employess.

    I do have to quote you on this one.
    “Certainly, Zynga has had issues over the years, but it has also made products that millions of people love. Facebook itself could likely see traffic and engagement fall, at least in the short term, if Zynga’s games disappear. Lots of other developers are hungry to grow, and we expect they’d happily try to take Zynga’s Facebook user base. But are they able to create and operate as many high-quality games at the scale Zynga has already achieved?”

    What high quality games? Like I mentioned earlier. They have cloned every game or bought ever game. Please have facts about things before you try and blow sunshine kisses at Zynga.

    Leaving Facebook and Zynga
    Oh here is one thing you can count on if Zynga does go to Zlive.
    Zynga leaving Facebook isn’t going to happen anytime soon if ever.
    Why you ask? There are a lot of common sense reasons
    * The obvious… they will lose 50 to 80% of the players they have now
    * They will have to spend 10 to 20% more on advertising to get new users to the site
    * It will not be as socially sound as Facebooks servers. It would take them months to get up to speed on making it so it doesn’t crash with the influx of people who will continue to play on the Zynga “insert site name here”. This noted by the staff at Zynga in the Zynga forum. Using the excuse we never thought the game would grow this big this fast. They are still using that excuse when the numbers have stayed relatively around the same bench mark in Mafia Wars for over a year. If they cant handle Mafia Wars which is only 5.4 Million players a day. Then how are they going to run a social network that will be packed with numbers almost instantly?
    * It would not be a social as Facebook because of the small dynamics Facebook has put into place to make communication and sharing easy.
    * They would have to recode a lot of lines in every game to make it compatible with Zynga “insert site here”
    * There would be data base problems with account switch overs. That is just a given with the massive amount of people. No one can really expect this to go smoothly. That in turn leads to a massive amount of customer service people needing to be hired on a temp basis to help deal with this issue.
    * Costs to keep the Social Network up and going which Zynga does not pay now

  7. Kachina422 says:

    I play a lot of games on facebook. With the exception of 2, they’re all Zynga games. The family and friends that I keep in touch with also play these Zynga games. So, if Zynga leaves fb, so will we. We can communicate just as well within the game framework anywhere else.

    I’ll pop into facebook once a week to see how my non-game playing friends are and then return to Zynga’s site.

  8. jojo says:

    Just remember that the millions of users can go else where……Myspace, the beginning of all Zynga games? Just return there! Its a shame that people cant reconcile for the sake of others! get Over it!

  9. Juliette says:

    As a developer I can see both sides. The spam was a joke at one point. However, Facebook have taken it away and have provided little alternative means for app discovery. What was good about the old days is that if a game was good and popular, more people played it, and the more people that played it, the more that game would gain traction (because there would be more spam). How about a 2nd (smaller) column on the home page or an “app spotlight” that shows the most recent app notification in the stream?

    The actual way users engage and discover apps right now is a joke. Indeed, some of the apps I have installed right now I can only find if I goto Account – Application Settings. If I click on “Applications” or “Games” from the main left hand menu all I see is some shoddy page which gives a random shot of what my friends are playing. How about a “your friends most popular games” summary page? What about a “the most popular games installed this week”? Why can’t I actually get to my own installed apps from there? How about listing installed apps on a users profile (according to users settings if they want to do that).

    In a way Facebook has unintentionally encouraged part of the spam methadology because they provided no better means for app discovery.

    Apple is about to launch a rival social apps service on the iPhone and Facebook actually risks losing custom to Apple, where recent history has shown they are hell bent on gaining market traction on anything they go into.

    Considering apps on facebook has been such an explosive movement, there is a lot of neglect – it’s almost as if they only have a 10th of the developers that they could really use. Most of the changes have been to take things away or curb activities and nothing is given back in return.

    And so in a sense, it’s unsurprising big names are threatening to leave. The little guy also loses too, I know that the smaller developers could stand a chance of there game gaining traction if it deserved to. Now, it’s like old times are back and set to stay – a game will only succeed if it has a big marketing spend. Sure, Facebook will benefit from that but I’m not certain it’s the best way for all concerned in the long run – especially when even Zynga are struggling with user numbres and they have bottomless pockets!

  10. Pedro says:

    Zynga go for it, i’m with u guys. hey open facebook for what?just yappin!!!!no way thanks…Lol

  11. Sharon says:

    I play the games on facebook, and find that all of my friends use the ‘most recent feed’ not the ‘Top News’ if a facebook user is playing any of the application games they will miss too many gaming items that other users post on the feed if they use ‘top news’. I play several different games on facebook some from zynga and others not, if zynga leaves facebook I will not follow.

  12. Deborah Wooley says:

    If it wasnt for Zynga games like Mafia wars and farmville, I would have never joined Facebook. Take them away and I and most all my friends will be gone as well.

  13. zynga fan says:

    Seems Inside social Games has an love affair with Facebook. That story had bias leaning toward facebook and that makes me sick. facebook was once nothing before it was built, it could be so again if they let greed take control over the right environment.

  14. Eric Eldon says:

    Thanks for the comments, everyone.

    Quick note: I find it funny that I am getting accused of being biased towards both Zynga and Facebook, when my article makes critical points about both companies. Before anyone else bothers to attack me, I’d like to point out that my goal here is to objectively discuss all perspectives on the issue, not pick one side to favor. I hope this point gets across to most readers.

  15. martin scouler says:

    dear sirs,this will be alost for facebook from point off view we can get zinga games on offer social pages and i do feel 30% off anybody bussiness is to much, i would like you both please to work it out .you both will loose because facebook needs to understand the end user ,all gamers dont use facebook in our minds,plus doing want you are doing to zinga games you are hurting the end user.facebook will have a mass,lost of people,so please wake up.

  16. Michael davis says:

    I have never been a fan of Zynga’s, but in this case, as a FB dev, I’m wondering why I develop for a platform that treats it’s developers this way?

  17. David Stansfield says:

    In any event, Both of these BIG Companies have made lots of money off us, (the Users), When this is all and done, the only loser is going to be the user !! You 2 Companies NEED TO GET OFF YOUR HIGH HORSE AND SETTLE THIS ! This looks like it’s going to leave a bad taste in my mouth !

  18. R Anthony Botti aka {WPP} Sonny Lombardini says:

    I’d offer one simple point: regarding allegations by Facebook that Zynga’s posts amount to spamming, that’s 110% absolute BULL****!!!

    I strongly doubt that ANYONE on Facebook doesn’t know you can HIDE app-generated posts you don’t want to see. Don’t want to see your Friends’ Mafia Wars posts on your News Feed? Go to the upper right corner of the post and a Hide button will appear. Click it, and three buttons replace the whole post: the first button is the option of hiding all posts by that Friend, the second, the option to hide all posts by the app and the third, the option to cancel the Hide motion altogether.

    While writing this message you’re reading right now, I used the feature described above to hide an app called Alien Calf.

    Since only a compleat f***ing IDIOT would be unable to figure this out, basing action against Zynga on the argument that their apps ‘spam’ the News Feed is a subterfuge and nothing more!

  19. Social game fan says:

    While I have made many friends playing games on Facebook. There has been been many changes to the games by both Facebook, and Zynga. none of which have benefited the users.
    Facebook has changed our feeds, and Zynga has taken over our game use. We now have useless updates of our friends accomplishments, as well as limitations to our gifting. While trying to inter-react with our friends in the various games we are made to “search” for their game plays.
    Myself, I would give any Znyga based site for playing their games a try, and forget about Facebook, as I am tired of the changes they have made to their site and to my sharing settings. Changes to any setting that are made by anyone on Facebook should never be allowed by anyone except by the ones who made the settings, and changing the rules does not give Facebook the right to alter anyones settings. Just my opinion

  20. Barbara says:

    http://www.facebook.com/pages/I-will-follow-ZYNGA-to-ZLive/121642724526069

  21. Guido says:

    People tend to fall on a Social Gaming spectrum. On one side there is the people who will block every single gaming app because there feeds get so cluttered. On the other there is the hardcore gamer who posts everything, and just uses the platform for gaming.

    I tend to fall towards the “Block Everything” category. I like to play games on facebook with my friends, however I refuse to post items to my wall, and I refuse to add random strangers to my facebook. I have tried most of Zynga’s games, usually I get to about level 20-30 and I get bored of them and quit. I find that you pretty much get to a point where you need to go out and add strangers, which really doesn’t interest me. I am Currently Playing Mafia Wars (although I think all my friends have quit) and Farmville (lots of friends still play it, but I think it’s really dull and time consuming) as well as Treasure Isle (not bored of it yet)

    Personally I think a social network focused exclusively for gamers is a great idea. I would check it out for sure, and I’d go out and I’d post game spam, and I’d add random people from the internet because it wouldn’t matter because I didn’t join the network to stay in touch with people, I joined it to play games.

    So bravo to Zynga, I hope that ZLive works and you leave facebook. The facebook platform was not meant for what you are using it for. You’ve got a great product and great talent for creating (stealing, whatever) and marketing (spamming, whatever) games. I wish you the best of luck.

  22. GT says:

    Eric–Great article.

    One comment–the issue is not so black and white.

    Zynga doesn’t want to “leave” facebook.

    Zynga wants to have a gaming presence wherever the users happen to be. Social Graphs are critical to Social Gaming. Wherever there is a social graph and a platform, Zynga will try to be there. This means developing applications on facebook, myspace, iphone, msn.com, zynga live, shit, maybe even twitter. If there’s a social experience, Zynga wants to develop a social game.

    In an ideal world, they’ll launch their own live site as well as maintain a presence on facebook.

    Zynga clearly contributes a ton to facebook’s bottom line. Ad Revenue ($100MM?), Ad Inventory (20% of it = 200MM?), and soon to be credits (150MM?) => $450MM/year. That’s at least 1/3 up to 1/2 of FB’s estimated revenue. While Zynga has a lot to loose, FB sure does, too.

  23. lala says:

    I only play games through facebook. Now that the website is up for Mafia Wars, I don’t see a need to be on facebook. I talk to all of my real friends the old fashioned way.

  24. D J says:

    From the comments above, you can clearly tell that social gaming has driven facebook adoption and engagement. Especially in foreign markets, facebook had very little penetration until quality games such as Zynga’s were available. Its absurd that facebook is willing to piss away a symbiotic relationship.

    Beyond credits, an unreasonable ask is this:
    “Facebook is trying to get Zynga to agree to a long term deal where Zynga remains primarily on the Facebook platform.”

    After jerking developers around with misinformation, false promises, sudden policy changes, etc. and basically making the environment immensely unattractive…they want developers to be exclusive? HA – what a joke. They’ve done the same to their users – LOSE trust.

    I’d love to see Zynga build their own platform as well as distribute their games on other social networks. Hopefully they will all grow and Facebook will snap out of their stupidity as they begin to fall…..

  25. Miket says:

    I play Mafia Wars a lot what Facebook users call Spam is how you play the game and notify your fellow players, for those who know how to use face book it was easy to eliminate these feeds from your wall with no problem.

    Yha complete lack of knowledge of FB users, and FB’s hold hostage tactic’s have forced Zynga to look another direction.

    Zynga as posted is no Angel they sell their customers junk and trick you into spending every dime you can at ridicules prices for what you get, they are always screwing with the game.

    For me I play and love my fellow players if we have to move millions will go, in the long run it will hurt both companies.

    Posting music, comments and other misc items while playing is what FB brings to the plate a play only network will probably slowly die.

  26. DPH says:

    Here’s my wild notions and conspiracies:

    1) My sense is that once FB charges a 30% premium, Zynga will no longer be profitable given the bloated (and high cost) headcount they have reached. They’ll have no other choice but to leave FB

    2) Pincus’ ego is driving a lot of Zynga’s behavior towards Facebook

    3) Zlive will have to compete with the Popcaps and Pogo’s of the world, who already do a better job of creating an online service for their core users

    4) Zynga was popular because of it’s ability to glom on to FB’s population. Their hard-core users will follow them, but they will struggle to continue to grow. If anything, they have now plateaued

    5) The social fad is over

  27. Laura says:

    I’m at the saturation point with the social games on Facebook. Zynga in particular is abusing the privilege of having email addresses. I’m getting a lot of email from them and most of it is about games I don’t play. Including Mafia Wars which I added to my block list over a year ago. It is ticking me off. I don’t think Facebook or Zynga are thinking of the social aspect at all, just the almighty dollar. I can find lots of online games sites which don’t make me feel harrassed or spammed as I do with Facebook games. Zynga being one of the worst offenders in my experience.

  28. {{STIGMATA}} says:

    I say ZYNGA should break away from facebook..
    they have made plenty of money to do so and can still advertize on facebook.. facebook is a joke and the only reason i use it is for games!!!!
    if i want to talk to friends i use SKYPE ..
    In my eyes facebook burnt it bridge !!!

  29. DEATH says:

    …shortly…

    …How many computers have I not burnt out using facebook,,3 new computers so far,and it is not by using them on the zynga games. It is all the changes they made to tore up the feed as one of examples, and the computers have to work in a way similar as to run the fist into a wall of solid stone. Not only that,,but the privacy?? There is no way so easy to to get inunder the skin of just anyone and their personal information but the own personal safety to even keep/deactivate an account is impossible.. then the reposting adverticing they do if something goes wrong with the site while they test a new layout e.g. I am sure they do it to advertice them self a high ranking of interest after developed changes, wither the reports are contents of negative/positive complaints,it all will never be summed as else than a higher rate of interest for facebook or to count the users. well hackers paradise..I have my self on the friendlist,who need an extra door into the own home when using just one of them?? There is a hugh list to complete but I am sure anyone beeing a regular user on facebook would agree this is the facts..And I wish to be corrected by one to know better facts about it,but I personally think they either have a fox hidden there when this sudden hits the air without even a warning ..or..that they are hysterically and frighten to get the blame for the collaps of facebook/zynga…in the long run as many of us will act in masshysteria the blame will in the end fall on us..in any whatso ever the consequences of what ever reason to this all,is us to take…We might loose all of the spent money and time laid into the games there,,it will cause masshysteria…and once again that will draw up the internet ranking of interest/traffic/news/adverticings…both to facebook and zynga…Everyone is most likely right now google’ing up some news and answers on what is going on with zynga/facebook…and by then,giving them a higher rank of internetactivity to get them popularity points…

    I have no idea what I will do when the hackers paradice brake down upon us…probably, get back to my canvas and paint a new world,reuptake my gift of writing poems..or maybe I even..reinstate a life….

  30. As the Pot Stirs on Facebook says:

    [...] 3. A greed fight growing between Facebook and its game partners (farmville etc.). Facebook wants to force users to buy FB credits to buy in-game items and charge a 30% premium to the partners.  Facebook and Farmville split? [...]

  31. Ric Moore says:

    30% is just plain greedy. Same applies to Apple. They should lower it to 10% and then there would be less to complain about.

  32. Virtual Worlds News > Zynga pourrait lancer sa propre plateforme virtuelle et divorcer de Facebook says:

    [...] En ce moment la tension est très forte entre Zynga (le roi de social games) et Facebook (le roi des plateformes sociales). Les raisons de cette tension sont bien évidement économiques mais pourrait avoir d’énormes répercussions si le conflit s’aggravait : Facebook and Zynga Battle Over Credits, and Bigger Platform Issues. [...]

  33. Tadhg Kelly says:

    That’s a really great article Eric. Well done.

    On the subject, my advice to Zynga is this: Suck it up.

    The reality of their situations is that they are a marketing engine, not a loyalty-driven game service, and that engine is constructed around Facebook itself. The brutal fact is that they can’t leave without throwing their valuation in the toilet. I estimate that if they did start divorce proceedings it would cost millions to replace the Facebook-dependent architecture in their games, millions more to launch a new network, and even then they would get 5% of their users to move at most.

    The reason, often highlighted by myself and others, is that their products are not so great that users can’t find the exact same thing somewhere else. It’s simply delusional on the part of anyone to think otherwise.

    So in reality, what this is is a sign that Zynga has maxed out. It’s time for Mark Pincus to sell up and start a new business. Zynga itself can function perfectly well as an earnings engine with slightly reduced margins for a long time to come, but that all goes away if they start deluding themselves that their audience will move with them.

  34. Lyn says:

    I hope Zynga do leave. I am sick of FB messing us about!!!!!!

  35. Ren says:

    If Zynga would leave, it would a great day to celebrate!

  36. Wooga’s Jens Begemann on Facebook Social Gaming: An Insider’s View from the Outside says:

    [...] the past few weeks tension between Facebook and game developers has increased. With rumors of a tense relationship between Zynga and Facebook, complaints about removed “viral” channels and the [...]

  37. Facebook and Zynga “Enter Into Long-Term Relationship” says:

    [...] covered these problems, and more, in an article last week; we concluded that the two companies would probably work things out. Zynga needs Facebook users; [...]

  38. Facebook Issues First-Ever Press Release Reassuring the Market It’s Still Working With a Platform Developer says:

    [...] companies apparently were motivated enough to send a signal to the market that despite the recent issues in their relationship, they’ll be working together. For Zynga, the announcement reassures the market that its [...]

  39. App developers effected by Facebook Ban in Pakistan | Green & White says:

    [...] maker Zynga’s aggressive posturing against Facebook. And though their initial threat of completely boycotting Facebook may have [...]

  40. Like Buttons and Email Prompts in FarmVille Tighten Zynga’s Connection to Users says:

    [...] reason to start using these kinds of tactics, until recently. While the social gaming company was wrangling with Facebook over platform issues, it was readying a “Zynga Live” service as a backup plan, in case it had to leave [...]

  41. Yahoo to Run Zynga Games Across its Properties says:

    [...] who have been following Zynga’s contentious relationship with Facebook lately will likely assume that this is another move by the developer to find more distribution, users and [...]

  42. MySpace Offers Developer Services Program Along With New Platform says:

    [...] It’s not clear what else the company might do to attract developers, but the timing for all these moves is convenient. Facebook is in the midst of pushing developers to adopt Credits, while taking a large cut of their virtual goods revenue, even as it reduces communication channels that developers have relied on for traffic. Although some apps are still growing, many have been seeing traffic losses in recent months. Facebok has been taking some measure to ease the process, like signing on to a “strategic relationship” with Zynga (full terms were not disclosed), following tense negotiations around the largest social game developer’s business on the platform. [...]

  43. Should FTC file Facebook Antitrust? : Marty's Mind says:

    [...] businesses that rely on that platform.   We are also seeing preferential back room deals and purported arm twisting being used with Zynga to force adoption.  Simultaneously Facebook also wants to export their [...]

  44. Tedra says:

    zynga should stay with face book (credits) since zynga is still working with face book zynga is a great company but without facebooks advertising i know from personal use its users will fall also if zynga would stop worrying about the money and spend more time thinking about its main source its users than it will still will get alot of profit if not more im sure its pricing will increase but to the main fact they need 2 find some way that they could stay with face book and both agree i think the credits is a great risk worth taking they only have some of the zynga games up for that my favorite game in the whole world is (yoville) it is great for all ages and its so i would like to see that up for credits as well not just for my own use but for others as well i have over 260 face book credits just waiting 2 be use now and i know that if zynga tried the credits for a while they would get alot more users and would make alot of people happy so they would return the favor with more buissness so if they think money is the problem their wrong this is a great oprotunity for there revinue and i believe that this is a chance worth takeing and more people would like it becuase u cant just use the credits on 1 game it would work on all of them witch lets users choose freely i love zynga so much for creating the best games i have ever played but they need to be open to new oprotunities if u have any comments plz send me a message threw facebook my email is not working thanks (:

  45. Zynga Steps Out and Joins Forces With Google « Black Web 2.0 says:

    [...] into Facebook’s market share. Zynga does not have a short memory (referring to the recent dust up regarding virtual currency and how much share facebook wants) and I am betting that the combination of FrontierVille and a [...]

  46. Dr Drey says:

    zynga is just too greedy to share the profit. get lost man!! there are plenty of better game developers that have original ideas. not copycat versions that rip off ppl.

  47. jack byrne says:

    how do ye get free facebook credits

  48. David Rockefeller says:

    GIVE ME 10000 FB credits please

  49. Zynga Switches to Exclusively Use Credits in Its Facebook Games says:

    [...] Facebook and Zynga Battle Over Credits — and Bigger Platform Issues [...]

  50. Facebook Ban and Local Entrepreneurs – analysis by Hassan Baig of White Rabbit « White Rabbit Online Blog says:

    [...] maker Zynga’s aggressive posturing against Facebook. And though their initial threat of completely boycotting Facebook may [...]

  51. Gary says:

    zynga is a greedy company and they are getting what they deserve. to call what they make games is a sick joke and to compare them to real companies that make real games like capcom is pathetic. they make money by monopolizing every aspect of their glitchy crappy games. u can play a real game like world of warcraft for 15$ a month and have all the features and benifits not buy things pice by pice that are over priced to begin with. their service messes up on a regular basis and they just send u a form email apologizing but when it does get fixed they dont make it good with consumers they just say tough luck. hopefully they do move and let them die in obscurity. they are not a real game company and their new service wont take flight. REAL developers have that market locket so tough luck zynga.

  52. Quora says:

    Will Zynga launch an own game portal?…

    Zynga was working on Zynga Live a while back, as a tool to threaten Facebook into giving it better terms for using Credits.  http://www.insidesocialgames.com/2010/05/11/facebook-and-zynga-battle-over-credits-and-bigger-platform-issues/  When it got tho…

  53. Facebook’s Year in Mobile: Seeking Ubiquity on Devices, and in Apps Too says:

    [...] being left out of virtual goods and ad revenue. Zynga, Electronic Arts’ Playfish and Playdom, have been hungry for a way to diversify off the platform, where user acquisition costs have risen after the company crippled viral channels this year. [...]

  54. Facebook’s Year in Mobile: Seeking Ubiquity on Devices, and in Apps Too | Bradley A. Hensley says:

    [...] being left out of virtual goods and ad revenue. Zynga, Electronic Arts’ Playfish and Playdom, have been hungry for a way to diversify off the platform, where user acquisition costs have risen after the company crippled viral channels this year. [...]

  55. RewardVille Gets Players Hooked on Zynga’s Own Currency and Points, off Facebook says:

    [...] that Facebook puts in place around its business — Credits being the main example today, as Zynga tried hard to get out of paying the 30% fee for using the mandatory currency before signing to a five-year deal to use it last [...]

  56. CNBC Report: Zynga to File IPO as Soon as Tomorrow, Will Raise up to $2B says:

    [...] and revenue. Now might be a great time for Zynga to unveil its off-platform games destination if ZLive is a done deal, and of course Zynga’s rapidly-growing mobile offerings may help establish its [...]

  57. Refine. Test. Scale. Repeat – Runaway Play says:

    [...] Zynga and Facebook butting heads over credits and the constantly evolving social platform (p.s. we’re personally down with the whole credits thing) [...]

  58. Zynga Announces Zynga Direct, a Social-Mobile Network Enabled With Facebook Connect says:

    [...] ecosystem, if indeed the platform allowed Facebook players to play Zynga games without Facebook. At that time, Zynga was also struggling with Facebook’s evolving platform requirements and Credits [...]

  59. Kee says:

    Both companies need each other if not for going on Facebook I wouldn’t no about cafe world in which I am a daily player, or should I say use to be a daily player and because I like cafe world I’m on Facebook daily…. It’s all about the money for you guys but your not taking your users in account… Why do we have to pay for what you are going through? We are just trying to have fun.

  60. With the new timeline for pages, Facebook is assimilating the web says:

    [...] company initially sold their games through Facebook, but the relationship between the two companies went sour at some point, which seriously jeopardized the ability of Zynga to reach it’s users, and to [...]

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