by Cynthia Wright
If you have ever played Farmville, Cityville or Words with Friends, you have engaged with a Zynga game. While currently, all the games are available on social media titan Facebook, Zynga announced on Tuesday that they’ll be shifting their focus onto building their own video game platform.
While their admission doesn’t come off as surprising, being that they recently disclosed within their IPO how financially ruined their profit has been by Facebook. The road started to tarnish between the two when Zynga was forced to start charging customers with the Facebook Credits payment system.
Facebook Credits reportedly takes a 30% cut of all sales, prior to that, Zynga was sharing between 2-10% of those sales with the other electronic-payment services they were utilizing. The online video game company eased the new system between July 2010 and April 2011, with the financial impact being felt almost immediately. The IPO filing also stated that if Zynga continued with Facebook’s system, the bookings would have been approximately $150 million lower.
A recent MarketWatch article delved into the figures further:
Zynga didn’t disclose how much the move impacted its revenue, and the company is still posting heady top-line growth, which more than doubled (115%) to $279 million in the second quarter, from $130 million in the same quarter a year earlier. Zynga’s costs more than doubled in the second quarter of 2011 to $266.1 million from $116.7 million the year before.
At the same time, during the first six months of 2011, bookings ended up rising 5.1 cents from 3.6 cents, which was about a 50% increase. However, now that Zynga is developing their own platforms, their numbers should only get higher. Especially since, Zynga will not only be locked to Facebook now that it plans to develop games for Apple iOS, Google’s Android and Google+ social network.
“We really want to build a platform for play. We are trying to do something broader than be the company that will (just) make the next hit game,” Chief Executive Mark Pincus stated. As of this writing, there is no official launch date for Zynga’s video game site.
Cynthia Wright is an avid lover of all things geeky. When she isn’t freelancing, she can be found on her blog BGA Life and on Twitter at @cynisright.