Chunk of Facebook profit tied to game company Zynga

Facebook Inc., whose initial public offering is slated to be one of the biggest debuts in U.S. stock market history, has disclosed its heavy reliance on a single customer - Zynga Inc.

In its S-1 regulatory filing Wednesday, reported that it received 12 percent of its revenue in 2011 from Zynga, whose social games such as "" and "Mafia Wars" have drawn several hundred million players to Facebook over the years. Zynga launched its own IPO in December.

With $3.7 billion in total annual revenue for Facebook, that translates to roughly $444 million in direct payments from Zynga.

That figure does not include the revenue Facebook receives from displaying advertising around Zynga's games, which accounted for a "significant number of pages," according to the social network's public filing. Zynga's games pull in 56 million players a day, according to AppData.com, a site that tracks Facebook traffic.

For Facebook, Zynga is both an asset and a potential liability: "We currently generate significant revenue as a result of our relationship with Zynga, and, if we are unable to successfully maintain this relationship, our financial results could be harmed," the social network giant wrote among its "Risk Factors."

Facebook has reason for its unease. While Zynga's fortunes are now tightly entwined with Facebook and the social network's 845 million active users, the San Francisco company has made it clear that it wants to expand its games beyond Facebook. Part of the reason is that Facebook charges a 30 percent levy on the sale of all virtual goods sold via applications on its platform - including games from Zynga.

In October, Zynga unveiled a new online destination where its players can congregate outside of Facebook. It's also pushing heavily into mobile games, both on Apple's iOS platform and Google's Android Marketplace.


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Citation: Chunk of Facebook profit tied to game company Zynga (2012, February 2) retrieved 19 September 2021 from https://phys.org/news/2012-02-chunk-facebook-profit-tied-game.html
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