Summary:

Facebook and social games maker Zynga, which had been battling over their relationship, have settled their differences, ensuring that Zynga…

Zynga's Mafia Wars

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 remain 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.

The two companies aren’t disclosing any details about the agreement, as you can see from the vague release posted below. The deal, however, saves Zynga from a big revenue drop (and possible collapse) if it had to leave Facebook. Despite the launch of its own standalone gaming sites, as well as a new partnership with MSN, the company was still very dependent on Facebook as a platform. Likely at stake: The bulk of the more than $355 million in revenue Zynga is expected to bring in this year.

Facebook, meanwhile, gets to keep a slate of games on its site that have been credited for helping to fuel its growth.

Another possible factor in the resolution: Russian investment group Digital Sky Technologies is a major investor in both companies.

FACEBOOK AND ZYNGA ENTER INTO LONG-TERM RELATIONSHIP

Palo Alto and San Francisco, Calif., May 18, 2010 – Facebook and Zynga announced today that they have entered into a five-year strategic relationship that increases their shared commitment to social gaming on Facebook and expands use of Facebook Credits in Zynga’s games. The agreement provides a solid foundation for both companies to continue to work together to provide millions of people with a compelling user experience for social games.

“Facebook was a pioneer in opening their platform in 2007 and in just three years tens of millions of Facebook users play our games every day, from FarmVille and Café World to Treasure Isle and Mafia Wars,” said Mark Pincus, founder and chief executive officer at Zynga. “We are excited about Facebook’s long-term commitment to social gaming and Zynga, and look forward to working with them and other platform providers to bring the best social gaming experience to users worldwide.”

“We are pleased to enter into a new agreement with Zynga to enhance the experience for Facebook users who play Zynga games,” said Sheryl Sandberg, chief operating officer at Facebook. “We look forward to continuing our work with Zynga and all of our developers to increase the opportunities on our platform.”

Zynga is currently testing Facebook Credits in select games and will expand to more titles over the coming months. Terms of the agreement between Facebook and Zynga were not disclosed.

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