Zynga, Facebook renegotiate deal allowing for partnerships with other players
Facebook (NASDAQ:FB) and Zynga (NASDAQ:ZNGA) have renegotiated the terms of their social games publishing partnership, liberating Zynga to expand its products to additional platforms but also giving Facebook the latitude to build its own branded games.
According to documents filed Thursday with the Securities and Exchange Commission, Zynga is no longer bound to using Facebook as its exclusive platform partner for launching new social games and is no longer required to use Facebook Credits virtual currency, which awards a 30 percent cut of revenues to Facebook. In addition, Zynga must no longer prompt mobile gamers to log in via Facebook. Zynga will still make any new Web-based social game available on Facebook around the same time the title goes live on a Zynga property or rival social network, however, although this restriction does not extend to mobile launches.
While the revised agreement gives Zynga greater control over its games and the flexibility to develop its own virtual currency program, it also frees Facebook to build its own rival gaming efforts. The agreement submitted to the SEC states "Effective on March 31, 2013, certain provisions related to web and mobile growth targets and schedules will no longer be applicable and Facebook will no longer be prohibited from developing its own games."
Facebook denied it has any plans to enter game development. "We're not in the business of building games and we have no plans to do so," a Facebook spokesperson told All Things D. "We're focused on being the platform where games and apps are built."
Given that the revised deal allows Facebook to reduce its own dependence on Zynga and make its platform more appealing to other social gaming firms like Wooga and King.com, it seems unlikely that Facebook would rock the boat by introducing its own gaming efforts. Still, the possibility of Facebook entering the gaming arena helped send Zynga down nearly 9 percent in after-hours trading to $2.39, while shares of Facebook increased 1 cent to $27.33.
The revamped Facebook partnership represents the latest in a series of changes for Zynga. In recent months the firm has shuffled much of its executive staff and in October announced plans to shutter its Boston studio, reduce staffing levels in its Austin, Texas, division and sunset 13 games. Zynga has also moved away from its signature social gaming dynamics, launching mobile role-playing games and acquiring November Software in pursuit of the so-called 'midcore' market between hardcore gamers and casual mobile players.
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