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Zynga shares slide on Facebook renegotiation
/ November 29, 2012 2:01 pm

Zynga and Facebook entered into a new phase of their relationship, one that loosens many of the obligations outlined in their previous two-year agreement. Zynga’s shareholders were not happy.

The share price of the game company was down nearly 14 percent, then crept back up by 2 percent when Facebook made it known that the changes did not mean it was going to create its own games. Facebook, meanwhile, rose 3.6 percent and pretty much stayed there.

Zynga is no longer required to have players log in with their Facebook account. Also, Zynga is now free to offer something besides Facebook Payments for purchasing game items, and it has the option to not display the ads Facebook serves.

As a corrolary, Zynga’s status as most-favored Facebook game partner has been diluted even as it regained some control over its own destiny.

Facebook, meanwhile, re-established its right to make its own games. This gives rise to speculation, even if the social media giant said there were no immediate plans to do so.

Zynga’s chief revenue officer Barry Cottle released a statement: “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.”

Related links:

Bloomberg – Facebook Changing Zynga Terms Fuels Gaming Clash Concerns

http://www.businessweek.com/news/2012-11-29/zynga-loosens-facebook-ties-to-seek-growth-amid-weak-game-demand

Barron’s – Zynga Falls As Facebook Free To Develop Own Games

http://blogs.barrons.com/techtraderdaily/2012/11/29/zynga-falls-as-facebook-free-to-develop-own-games/

USA Today – Zynga changes Facebook relationship status

http://www.usatoday.com/story/tech/2012/11/29/zynga-facebook/1736149/

Betabeat – New Deal with Zynga Shows That Facebook Wants to Keep Its Frenemies Close When It Comes to Real Money Gaming

http://betabeat.com/2012/11/new-terms-partnership-zynga-facebook-sec-real-money-gaming/

 


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