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Facebook is feeling the impact of Zynga's troubles
Facebook is feeling the impact of Zynga's troubles
October 23, 2012 | By Tom Curtis

October 23, 2012 | By Tom Curtis
More: Social/Online, Business/Marketing

It seems Facebook is starting to feel the impact of some major changes in the social game space, as company CEO Mark Zuckerberg said today that he isn't too pleased with the way social games are performing on the major social network.

"Gaming on Facebook isn't doing as well as Id like," Zuckerberg said during an investor conference call. Much of those troubles are coming from struggling social giant Zynga, he said, as Facebook's gaming revenues from the company have declined 20 percent year over year, TechCrunch reports.

With one of social gaming's biggest companies facing severe financial turmoil, Facebook's overall business has also taken a notable hit. Facebook's payments and fees revenue, for instance, declined 9 percent quarter over quarter to $176 million. This is the first major decline these revenues have seen in quite some time, and it's clear that at least some of this dip is the result of the ongoing troubles in the social market.

These past few months haven't been very kind to Zynga, as its own revenues have fallen far short of expectations and players have left its games in droves. Those troubles got even worse today, as the company laid off over 100 employees and shut down its Boston studio.

Zynga has traditionally played a huge role in Facebook's overall performance, but the social network doesn't have all its hopes pinned on the struggling FarmVille developer. Zuckerberg said that smaller social game companies like Kixeye, Wooga, and are gaining marketshare and have somewhat made up for Zynga's declines.

Of course, Zynga isn't the only thing that's changed in the social space of late. Major companies like EA are also struggling to hold onto their Facebook players, and analysts believe that in many cases players are moving away from social networks and are instead embracing mobile platforms.

For now, it seems Facebook plans to favor those smaller, mid-core developers in the hopes that their growing and highly-engaged audiences will support the Facebook game market in the months ahead.

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Cordero W
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Oh no, gaming for facebook isn't doing so well for a website based around social networking.

Oh no, indeed.

Kevin Fishburne
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Haha, got a little laugh out of me with that one Cordero.

Maybe someone can fill me in here, but surely one can play Facebook games on a mobile device, right? If not, then holy facepalm, Batman. If so, then I can only guess that they're being excluded from the Apple/Android software repositories and users must go to the browser to manually access them. The latter would make Facebook games second class citizens since they require stepping out of the usual, convenient installation mechanic.

Or maybe the games are just so shitty the access semantics don't matter? I'm speaking as a Martian on the subject of Earthlings, so I apologize if I don't get why this is happening.

Jason Carter
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Agreed, I don't play facebook games, but if they aren't able to easily port them to android / iPhone apps with a simple (click to login with facebook) button like so many things have now, then I can see this being a problem.

And if they don't have that... well they probably should figure it out.

Ramin Shokrizade
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There is a lot of competition in the mobile space, so flooding the space with cheap clones (the current strategy) is perhaps even less effective than it is on the PC side of Facebook. This and also the microtransaction bubble is bursting, which will paste most of the companies in our industry since 57% of all game investment last year went into Facebook games, and they all use microtransactions.