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Zynga and the perils of becoming a platform

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I will give Zynga (s ZNGA) this much: It has some serious stones for setting up as a place for its own games and those of third parties to live outside Facebook. And you can’t really blame it for doing so. After all, too much dependence on someone else’s social network — whether it be for users, revenues or both — is never a good thing. But being a platform provider and an aggregator of entertainment options is a hard business and not one to be taken lightly.

The launch of is more than a bit of a reversal for the casual gaming company. After all, Zynga really only exists today because it tapped into Facebook’s app platform and rode the wave of social sharing to success. That is not necessarily a bad thing, of course. Zynga has simply been better at social than anyone else, in terms of getting users to share and convince their friends to sign up, gaining rewards all the while.

Prior to Thursday’s announcement, Zynga and Facebook had a symbiotic relationship where, like the Nile crocodile and the Egyptian plover bird, each party helped the other one out. Nearly all of Zynga’s revenues have come from Facebook, and about 12 percent of all Facebook revenues have come from Zynga.

That might have been a fine relationship to have when Zynga was a scrappy little startup, but now that it’s a publicly traded company, its reliance on Facebook is a huge risk factor for investors. So it makes sense Zynga would want to have a little more control over where and how users access its games and a little more independence from Facebook.

But I question how many casual gamers recognize that Zynga makes FarmVille, Words With Friends and Mafia Wars — and how many, knowing this, will take time out of their Facebook gaming sessions to go to some other site to play those games instead. Games will still be linked to a user’s Facebook profile, and Zynga is just giving them the option to play on But it is notoriously difficult to create a platform and a destination site and to aggregate an audience, even one that is already using your product.

A lot will depend on how much actual value the platform will provide to consumers. Facebook works because — surprise! — people spend more time on Facebook than pretty much any other site on the Internet, as much as seven hours a week, according to a recent study.

But as time has gone on, there is evidence that it has become more and more difficult for game developers to stand out from the crowd on Facebook. Last month, IHS iSuppli reported that the percentage of all Facebook monthly active users visiting games on the site dropped from 50 percent to about 25 percent. With a growing amount of content being shared, it has become harder for gaming companies to attract new users on the social network.

Will help reverse the trend and get more people playing its games and others by providing an alternative place for casual gamers to congregate? Zynga is talking it up as a place where users can quickly and easily find other friends who are active on the platform. The flip side is that it might become a place where only gamers congregate, which would mean the addressable audience for new games will be much smaller than the more heavily populated platform that Facebook has.

4 Responses to “Zynga and the perils of becoming a platform”

  1. Justin Beere

    Surprising stats there about the decline in Facebook gaming engagement. Also surprising: that Mr. Lawler went “crocodile/plover bird” instead of the more standard “clown fish/see anemone” example of symbiotic relationship. But it’s a decision I respect.

  2. Scott Bonagofsky

    It’s not that hard to get people to come to the site to play games. Look at how Armor Games does it with the game “Sonny 2.” You can play 2 character types on, but to play the third “Hydraulic” character type, you have to go to Armor Games’ website to do it. The game on Kongregate has a link to it that automatically takes you to Armor Games’ site when you choose the third character type. Adding these kinds of premium features to Zynga’s .com version of the games will have people coming there in droves.

  3. Ryan, what is so notoriously difficult about being a destination and a platform? Once you are a destination with decent amount of sustained engagement, enabling others to tap into your audience and at the same time add value for your audience is kind of a no brainer at this point, no?