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Facebook to Zynga: Social games are growing, not shrinking

The tiff between the world's largest social network and the company behind the "FarmVille"  social game escalated this week.

Facebook on Tuesday shot back at Zynga, saying the number of people playing games on the social network on a monthly basis grew 8% in the first six months of this year.

The figure directly contradicted Zynga's contention in July that the number of players on Facebook shrank 16% between April 1 and June 30. Zynga blamed the "challenging" Facebook environment for swinging to a second-quarter loss and missing its annual financial targets.

Not so fast, said Matt Wyndowe, the social network's product manager for games and applications. In a talk Tuesday at the Game Developer Conference in Cologne, Germany, Wyndowe said more than 235 million people worldwide played a game on Facebook in the last 30 days, up from 205 million a year ago.

While Facebook said nothing untoward about Zynga at its presentations this week in Germany, tensions between the two have ratcheted up over the last year.

Zynga and Facebook are classic examples of Silicon Valley "frenemies." Each needs the other, but their agendas don't always mesh.

This is now the case with the two newly public companies, said P.J. McNealy, a media consultant with Digital World Research in Boston.

"The goal for Facebook is simple: engage existing users and drive new users to generate more ad revenue," McNealy wrote in a report published Friday. "The collateral damage for Zynga is clear: more competition for Zynga games."

In other words, Facebook has been spreading the love that it once lavished almost exclusively on Zynga and trying to promote a wide diversity of games on its platform, from simple arcade games such as King.com's "Bubble Saga," to hard-core strategy games such as "War Commander" from Kixeye.

Facebook, McNealy argued, is shifting its focus toward expanding its audience so it can grow its advertising revenue. As a result, it's less focused on revenue generated from the sale of virtual items for games, of which Facebook gets a 30% cut.

Last year, 12% of Facebook's revenue came from Zynga, which paid Facebook roughly $444 million. Perhaps the over-reliance on a single company gave Facebook pause to rethink its relationship with Zynga.

"At the end of the day, Facebook is doing what it needs to do: deciding between gaming revenue and ad revenue, and choosing ad revenue  to Zynga's detriment," McNealy wrote.

ALSO:

Facebook got 12% of revenue from Zynga

Electronic Arts sues Zynga for copyright infringement

Investors clobber Zynga shares after second-quarter miss

Twitter: @AlexPham

 

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