Game developer Zynga has a close relationship with Facebook. In fact, it may be a little too close, with each one depending on the other to stay afloat financially.
But that relationship appears to be unwinding.
Some 15% of Facebook’s total revenue was brought in from Zynga this quarter, according to Facebook's latest S-1 filing. Of that revenue, about 11% comes from the 30% in transaction revenue Facebook takes from Zynga for virtual goods as well as direct advertising bought by Zynga. The other 4% comes from advertising from Zynga games.
The 15% number is down from 19% last quarter, where 12% of Facebook’s revenue came directly from Zynga and 7% came from the revenue generated by ads.
Despite Zynga’s lower percentage, Facebook revenue from payments and other fees was $186 million this quarter, nearly double the $94 million it made in Q1 2011. Total revenue was $1.06 billion, up 45% from the same time last year, but down from the previous quarter.
Facebook issued a rather dire warning about where its relationship with Zynga is heading, and what that means for the company.
"Zynga has recently launched games on its own website and on non-Facebook platforms, and Zynga may choose to try to migrate users from existing Facebook-integrated games to other websites or platforms. We may fail to maintain good relations with Zynga or Zynga may decide to reduce or cease its investments in games on the Facebook Platform. If the use of Zynga games on our Platform declines for these or other reasons, our financial results may be adversely affected.”
For its part, Zynga might not feel that it needs Facebook any longer since launching its own platform in March.
The company has been on a bit of a tear since it raised a $1 billion IPO in 2011. Zynga bought 15 companies in 2011 alone and in March it made headlines by buying up OMGPOP, makers of the popular game Draw Something, for $180 million.
It was also recently rumored to be going after Glu makers of “Contract Kill: Zombies” and “Gun Bros.”
Since going public in December, Zynga stock has been inconsistent.
The stock initially closed at $9.50, then jumped 15% in February after Facebook filed for its IPO and Zynga’s contribution to the company was revealed. The stock hit its peak last month at $15.41 after announcing its gaming platform. As of this writing, the stock sits at $9.00.
(Image source: i-dothink.com)