Facebook, Zynga Settle Dispute; Announce Five-Year Partnership | paidContent
Facebook and social games maker Zynga, which had been battling over their relationship, have settled their differences, ensuring that Zynga titles—like FarmVille and Mafia Wars—will stay on the site. Zynga is the top app developer on Facebook, but in recent weeks had been reportedly preparing to exit the social network, after negotiations with Facebook over the use of Facebook’s virtual currency system, Facebook Credits, fell apart. Under a new five-year agreement, however, Zynga has agreed to expand the use of Facebook Credits and Facebook has agreed to a “long-term commitment” to Zynga.
Big loss for Zynga; big win for Facebook.
Facebook now has a huge driver for its Credits program. The success of the currency is virtually ensured if Zynga maintains a strong lead in the social gaming sector.
Zynga, though, struck a deal with the devil in exchange for more time. This seems like a damned if you do, damned if you don’t decision. They could have walked away from Facebook, but the vacuum they’d leave would be eagerly filled by the same knock-off gaming they’ve pioneered. And sadly, their biggest asset is their community, one owned part and parcel by Facebook.
While this deal probably saves them from cutting their margins as they adopt Facebook’s currency, it leaves Zynga in a precarious position: if they succeed in the next 5 years, Credits will succeed with them, leaving them not many options when their deal runs out.
