Zynga to Facebook: We Need Space

The social networking giant and the gaming company put distance between them

It’s a little less complicated between Facebook and Zynga.

The game development company has made the first step to moving on from the social networking giant.

Zynga’s games were much of the driving force behind Facebook’s profitability. Games like Farmville, Words with Friends and Mafia Wars helped produce 13 percent of Facebook’s revenue in the first nine months of 2012.

The five-year deal was signed in 2010 and bound the two companies tightly, but the amended agreement relaxes on certain prior restrictions. For instance, Facebook can now develop its own games. As for Zynga, they no longer have to use Facebook as the sole means to log in to games and the San Francisco-based company will no longer have to use Facebook ads or its virtual payment system, which once gave Facebook 30 percent of all sales that flowed through it, on its new site Zynga.com.

The news caused Zynga’s stock to drop. Shares fell 6.5 percent to $2.45. Facebook stock remained flat. Facebook shares are trading at $26.92.

However, Zynga is planning a money move that could boost revenue. The company is moving into online gambling games in other countries, according to CNN Money in other countries – they are banned in the U.S. Facebook will likely follow not too far behind.

 

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