Zynga Gunning Up (And Lawyering Up) For War Against Facebook With Zynga Live(techcrunch.com)
techcrunch.com
Zynga Gunning Up (And Lawyering Up) For War Against Facebook With Zynga Live
http://techcrunch.com/2010/05/07/zynga-gunning-up-and-lawyering-up-for-war-against-facebook-with-zynga-live/
16 comments
Aww too bad... it couldn't have happened to two sleazier companies.
Yes, but I do feel a little bad for the other 20,000 developers that don't have the resources to do anything about it.
It's now clear that "open platform" hype is pure marketing spin -- bullshit-speak to make you think they actually give a fuck.
It's now clear that "open platform" hype is pure marketing spin -- bullshit-speak to make you think they actually give a fuck.
Me too since I'm one of them (and my company now 12 of them) but FWIW, none of us ever forgot that Facebook is not the web, and that it has a profit-motivated owner. We've all expected this coming, and any who didn't deserve what they get for being naive.
I'm writing a blog post on my thoughts about it, story at 11.
I'm writing a blog post on my thoughts about it, story at 11.
Same goes for Apple and the uprising against their banning of non-native development tools. Facebook is not the web, and iPhones are not computers.
You may also like... http://futureoftheinternet.org/ (hit the Download link for a free copy)
Everybody has an "open" something or other these days. The term has been rendered meaningless.
Not that I'm a fan of Zynga, but does anyone else think Facebook is moving too fast, too soon? In the past two weeks they've alienated their developers, their users, and generally inspired a lot of just plain bad press.
I think their leadership have become arrogant from their success and are somewhat naive. I understand trying to make more money and build the company but you are supposed to do this in a way that feels beneficial to your users.
Their current behavior is very poor strategy, even from someone as powerful as Facebook.
Their current behavior is very poor strategy, even from someone as powerful as Facebook.
There have been many occasions previously when Facebook did something that was really fast - Beacon, profile redesigns, moving apps onto separate tabs, etc. etc. - each time there was a lot of bad publicity and some high profile account closings; in the long-term it didn't do anything to slow down Facebook's growth.
I am not saying that there can never be another social network that knocks Facebook out of #1, but bringing back features or privacy settings that Facebook dropped in favor of long-term growth is not the strategy that will bring about that kind of change.
I am not saying that there can never be another social network that knocks Facebook out of #1, but bringing back features or privacy settings that Facebook dropped in favor of long-term growth is not the strategy that will bring about that kind of change.
If there was a decent competitor to Facebook who had a lot of uptake (or even a more "open" networking system), now would be a good time to take advantage of all of Facebook's negative publicity.
Right now I don't see anything good enough to start a transition away from Facebook, even if many people wanted to move elsewhere.
Right now I don't see anything good enough to start a transition away from Facebook, even if many people wanted to move elsewhere.
Social Networks tend to be regional, bebo for europe, myspace in the US, friendster & hi5 for South East Asia, Orkut for Brazil, etc. If you decouple your game enough from social networks you can make them work on all of them and perhaps add incentives to use the more profitable networks over others. (10 Facebook credits only gets you 5 farmville points, but buying direct on farmville gives you 5 farmville points for the same price as 5 facebook credits, etc)
FYI, bebo is dead in Europe, its Facebook all the way. (I think I heard AOL announced they were shutting Bebo down anyway.)
There are two questions this brings up to me, in relation to your points.
1) At one point are people willing to give up on Facebook w/o an alternative in enough numbers to seriously hurt the site.
2) How big is the time window that FB has to fix the problems before a competitor automatically could become a serious threat simply because of how fed up people are?
1) At one point are people willing to give up on Facebook w/o an alternative in enough numbers to seriously hurt the site.
2) How big is the time window that FB has to fix the problems before a competitor automatically could become a serious threat simply because of how fed up people are?
Yeah, who do they think they are, Apple?
You would think that DST, who's invested tons of money in both Zynga and Facebook, would try to keep the peace here. I read they're pretty hands off though.
Zynga helps Facebook by keeping people on the site and giving them a reason to come back. Facebook gives Zynga a huge audience to tap into. If Zynga goes off on its own I don't see it helping either one.
I'd be happy though, less Farmville spam to deal with.
Zynga helps Facebook by keeping people on the site and giving them a reason to come back. Facebook gives Zynga a huge audience to tap into. If Zynga goes off on its own I don't see it helping either one.
I'd be happy though, less Farmville spam to deal with.
From what I've read, Zynga's ad spend represents a huge portion of Facebook's revenue. If that's true, this could pull them right back into the red.
However, it's unclear whether Zynga would continue to advertise on Facebook even if their games no longer run there. I'm pretty sure much of their growth is due to ads on Facebook. It really would be the dissolution of a symbiotic relationship, which I imagine will be tough on both companies. Seems like the perfect candidate for an acquisition, but who would acquire whom? Does Zynga bring in more revenue than Facebook?
However, it's unclear whether Zynga would continue to advertise on Facebook even if their games no longer run there. I'm pretty sure much of their growth is due to ads on Facebook. It really would be the dissolution of a symbiotic relationship, which I imagine will be tough on both companies. Seems like the perfect candidate for an acquisition, but who would acquire whom? Does Zynga bring in more revenue than Facebook?
Interesting, I dont think Zynga brings in more revenue than facebook; however, facebook is trying to gradually acquire 30% of Zynga's revenue through facebook currency. Fb doesn't even need to acquire Zynga.
Zynga has a very weak hand, and facebook can always give priority placement to game companies that decide to play by the new fb rules.
Zynga's games are absolutely replaceable all the game companies have games that are almost perfectly identical.
This "leak" shows how weak Zynga's position actually is.
Zynga has a very weak hand, and facebook can always give priority placement to game companies that decide to play by the new fb rules.
Zynga's games are absolutely replaceable all the game companies have games that are almost perfectly identical.
This "leak" shows how weak Zynga's position actually is.
The games themselves may be replaceable, if you're just starting out.
But I don't think that anyone who has invested over a year in gaining achievements and advancement in FarmVille is going to just switch to a new farm game and start all over again.
But I don't think that anyone who has invested over a year in gaining achievements and advancement in FarmVille is going to just switch to a new farm game and start all over again.
Agreed, and these days I'd say most of Zynga's marketing is piggybacking on their existing games. They use their position as leverage to introduce new 'properties', which I'd guess they could use to direct you off of Facebook. Especially if this off-FB site of theirs takes off and the bad press continues.
That's quite true, I hadn't thought of the individual achievements in the game. It will be interesting to see how strong that investment would be for users.
Facebook could do anywhere between $1.1 to $2 billion in revenues this year. Zynga is doing at most $600 million.
I think I can sum it up by saying facebook has become a big, dumb company. It's a little early to call it, but it's looking more and more like the next excite/yahoo. Trying to be too smart by a half.
So are they actually considering leaving Facebook?
The headline implies yes, but from the content of the article it sounds much more like this is just gamesmanship as the negotiate a rev share and need to act as if they have other options.
On the surface, this looks as credible as when Time Warner Cable and Viacom were pretending they could part ways.
The headline implies yes, but from the content of the article it sounds much more like this is just gamesmanship as the negotiate a rev share and need to act as if they have other options.
On the surface, this looks as credible as when Time Warner Cable and Viacom were pretending they could part ways.
Facebook saw all those millions generated by Zynga and the logic step was to get Zynga to use their paying system and charge them a percentage...
Zynga makes some 1M a day, Facebook some 2M/day. Obviously Facebook is not so happy about someone making half what they make within their own platform.
Don't forget FB also has way higher expenses maintaining all of the servers and the larger staff, so their income may be higher but their profits are likely significantly lower.
This is a very weak leak by Zynga, I don't see how they can do anything but complain about facebook's change in policies.
Why can't Zynga use their games as a means to move its users outside of the FB wall and into a Zynga-only platform? It seems that many of Zynga's users would do almost anything for some free game credits.
Zynga can (and will ) I just think it adds a more difficulty to retaining customers, and getting the free advertising on facebook through messages and requests etc. as people log-in zlive and don't play on fb.
But here's the worst from Zynga's side:
I dont think there is anyway Zynga can move people over fast enough -- fb will own a large chunk of user data (and realistically that's the big advantage Zynga has right now -- copying gameplay is easy, analytic packages are out there like mixpanel to optimize ROI on ads).
This really signals fb must really see gaming as a pathway to significant profits, and fb is will own the data on the most active and profitable players ( time spent, new games tried and with fb currency $ spent etc.) and could always expose this data to advertisers in some fashion to commaditize the market further.
But here's the worst from Zynga's side:
I dont think there is anyway Zynga can move people over fast enough -- fb will own a large chunk of user data (and realistically that's the big advantage Zynga has right now -- copying gameplay is easy, analytic packages are out there like mixpanel to optimize ROI on ads).
This really signals fb must really see gaming as a pathway to significant profits, and fb is will own the data on the most active and profitable players ( time spent, new games tried and with fb currency $ spent etc.) and could always expose this data to advertisers in some fashion to commaditize the market further.
The way facebook is going about this is absolutely the wrong angle.
I understand its their platform, and they can do what they want, but they should live and die like any other payment system. Zynga should choose them because even with the 30% skim, Facebook credits still give Zynga more revenue than other payment systems. This isn't too hard to imagine - Facebook has the ability to integrate credits with their site like no 3rd party provider can.
Instead they come across like cry babies.
I understand its their platform, and they can do what they want, but they should live and die like any other payment system. Zynga should choose them because even with the 30% skim, Facebook credits still give Zynga more revenue than other payment systems. This isn't too hard to imagine - Facebook has the ability to integrate credits with their site like no 3rd party provider can.
Instead they come across like cry babies.
This is what happens when you live and die behind a walled garden.
Huh? Zynga's apps only depend on Facebook for advertising in users' streams. This is no different than Google refusing to show a company's ads.
This is what happens when you depend on anyone for anything.
This is what happens when you depend on anyone for anything.
Well, the problem is that Facebook hasn't found an as reliable revenue stream as Zynga.
As a platform owner, it must suck that people are making more money off your platform than you. So you are tempted to co-op other people's revenue stream as your own.
As a platform owner, it must suck that people are making more money off your platform than you. So you are tempted to co-op other people's revenue stream as your own.
Facebook could always hire their own team to build games, and give them priority placement as some kind of special class of application all over the site. Then launch facebook credits with these games and give more perceived value with some kind of half price credits on these games deal.
Microsoft had a way to solve this, they simply reimplemented and replaced the successful application (see office, IE ..) but that would be evil.
Aren't the vast majority of Zynga's users coming from Facebook? If you go to Farmville.com, you need to login with Facebook Connect. I would have a different opinion if Zynga could survive without the Facebook interactions. However, their games rely on the network effect that Facebook brings... so they are very dependent upon the 'walled garden' of Facebook.
Now, this isn't the same type of garden as AOL in the day. It's more open, but make no mistake, Facebook controls the user, not Zynga. Because of this, Zynga has more risk than another web-based game company would be. At the same time though, Zynga has gained incredibly from the relationship.
But, if Zynga wants to keep the users coming, it needs to maintain that Facebook relationship.
Now, this isn't the same type of garden as AOL in the day. It's more open, but make no mistake, Facebook controls the user, not Zynga. Because of this, Zynga has more risk than another web-based game company would be. At the same time though, Zynga has gained incredibly from the relationship.
But, if Zynga wants to keep the users coming, it needs to maintain that Facebook relationship.
> Huh? Zynga's apps only depend on Facebook for advertising in users' streams. This is no different than Google refusing to show a company's ads.
A more appropriate analogy would be if Google had paid inclusion of advertisement directly in search results, rather than on the side. In that case, it would be fair for Google to be extremely judicious about those ads.
A more appropriate analogy would be if Google had paid inclusion of advertisement directly in search results, rather than on the side. In that case, it would be fair for Google to be extremely judicious about those ads.
[deleted]
Really, would the Zynga games have had any traction without Facebook?
No, but the question is: do they still need it now?
Nope. I just don't think the "walled garden" criticism really applies. Walled gardens usually don't allow you to put data in or take data out. Presumably Zynga will still be able to use the Facebook API on their site, so the data that is supposedly behind a wall will still be accessible.
http://news.ycombinator.com/item?id=1274692
This is what you should expect. Platforms will maximize their profits if they "tax" people the way countries do. Unlike a country, a platform can often tax more efficiently, and closer to the peak of the Laffer Curve.
This is what you should expect. Platforms will maximize their profits if they "tax" people the way countries do. Unlike a country, a platform can often tax more efficiently, and closer to the peak of the Laffer Curve.
Closed platforms...yay.
After taking money from the Russians, Facebook all the sudden operate like a Mafia.
Seriously, how on earth does Facebook expect to get away with a 30% tax and reduce virality to the point of only being able to advertise to get users?
I'm not sure it's a good strategy for Zynga to make enemies of Facebook--for a number of reasons. The one that comes to my mind is Facebook must have tons of data on Zynga's deceptive trade practices. If this info gets out, and it's as bad as the conspiracy theorists suspect, it could shut Zyna down.
Since Zynga's in-game credits are essentially a scam on multiple levels (remember Scamville? and the psychological manipulation / exploitation involved in the first place), they have absolutely zero moral high ground to complain about Facebook replacing their in-game credits with Facebook's own, especially if this cuts down on scammy behavior.