14 DAY TRIAL // The success of social gaming developer and publisher Zynga has long been linked to the Facebook platform, but until now it was unclear how much the social network itself depended on gaming for its revenue streams.
Official information delivered by Facebook shows that during 2011 Zynga alone was responsible for the creation of 445 million dollars in revenue (337.5 million Euro), which represents about 12 percent of the more than 3.7 billion dollars (2.8 billion Euro) that Facebook reportedly generated.
A part of the money was directly paid by Zynga in order to create advertising on the Facebook site, some of it was generated by ads placed on the pages hosting the games, and another part was linked to the 30% cut that Facebook takes from virtual goods sale.
The Securities and Exchange Commission filing from Facebook, required for its Initial Public Offering, stated, “If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected.”
Facebook has set a market value of about 100 billion dollars (75.9 billion Euro) in its IPO application, but that figure might see a re-evaluation in the coming months.
The date for the IPO has not been set.
Zynga and Facebook might be highly dependent on one another for their business model. However, the two companies had a tense relationship during the last couple of years, with the game developer at one point threatening to quit the social network and launch its own gaming site when the Facebook Credits system was introduced.
Analysts have recently raised doubts over the business model that Zynga uses, with one claiming that the company was spending more money attracting players to its games than it gets from them afterwards.