Zynga's bumpy ride seems to be far from over. Facebook amended a two-year-old contract with the "Farmville" creator reducing its dependence on the social networking giant who will be able to develop its own games now.
With the new deal, Zynga will no longer enjoy its "favored nation" status at Facebook which has been termed an "unfair favouritism" by other gaming companies. The deal would mean an end to Zynga's near-exclusive access to the social networking site's 1-billion strong user base. According to Facebook's 8-K filing with the SEC, Zynga will no longer be required to use Facebook as the log-in for game users, does not have to use Facebook payment as a means of payment, and doesn't have to display ads served by Facebook on its zynga.com site. On the other, the game maker will be able to host its Web games outside the social networking sites platform.
However, according to a Fox Business report, Facebook has no plans to jump into the burgeoning gaming business. "We're not in the business of building games and we have no plans to do so. We're focused on being the platform where games and apps are built," a Facebook spokesperson was quoted as saying.
Meanwhile, Facebook did not elaborate on the deal revamp, but explained in a sentence by saying, "We have streamlined our terms with Zynga so that Zynga.com's use of Facebook Platform is governed by the same policies as the rest of the ecosystem." "We will continue to work with Zynga, just as we do with developers of all sizes," Facebook said.
Zynga's share price dropped by as much as 13 percent in after-hours trading following the news of its renewed ties with Facebook. The San Francisco-based maker of popular online games shares plunged nearly 80 percent since its public debut in December 2011. After recording a slow growth rate, the company did lay off nearly 5 percent of its workforce recently and decided to eliminate 13 games and shutdown studios in various countries.
