Zynga and Facebook end their partnership

December 1, 2012

Zynga and Facebook have had a long-standing partnership, the developer essentially being the house that social networking built.

However, a new SEC filing has revealed that Facebook and Zynga have terminated their partnership – Zynga no longer gets special privileges, but is also free to distribute its games on any social media platform it chooses.

Unfortunately for Zynga, this causes somewhat of a panic amongst investors (who have already had to deal with a plummeting share price), causing the shares to drop once again, this time a substantial 12.6 percent.

Michael Pachter weighed in on the move however, saying that it was actually a win for Zynga.

“It’s good for Zynga, and neutral for Facebook. The down draft was because Zynga agreed to let Facebook develop games, which they have no intention of doing. No change in view on either, but more positive on Zynga.”

For Facebook, Zynga is no longer the golden goose it once was. Back in early 2011 Zynga accounted for a massive 19% of Facebook’s revenue – but by this October, this figure had fallen to a less impressive 7%.

Zynga’s chief revenue officer, Barry Cottle, made a statement on the amendments.

“Zynga’s mission is to connect the world through games. In order to do this, Zynga is focused on building enduring relationships with consumers across all platforms from Facebook and Zynga.com on the web to tablets and mobile. Our amended agreement with Facebook continues our long and successful partnership while also allowing us the flexibility to ensure the universal availability of our products and services.”

It remains to be seen if this will bring about new revenue opportunities for the struggling developer, or if this is just another hallmark of Zynga’s fall from grace.