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Facebook, Zynga, Reach Five-Year Agreement On Virtual Currency
by Leigh Alexander [PC, Console/PC]
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May 18, 2010
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Widely-reported tensions between Facebook and Zynga, the largest developer of games for its platform, seem to have dissolved with a new five-year agreement on virtual currency.
The source of the conflict between Facebook and FarmVille house Zynga comes down to Facebook's decision to introduce Facebook Credits, an over-arching currency system to be used in all games on its platform.
This allows users to purchase just one type of currency for use in Facebook games, rather than buying directly from individual developers -- a lack of direct control over its monetization that became a major point of contention for Zynga.
Also likely an issue is Facebook's decision to take 30 percent of revenues gathered from credits, with 70 percent allocated to the developers.
Zynga has also publicly urged Facebook to build a better infrastructure for gaming on its network, suggesting it should be more like "an open Xbox Live for the web." With today's agreement, Facebook has said it will use its 30 percent cut to "[invest] heavily into the ecosystem."
Although the two companies didn't disclose exactly how they resolved the dispute, they said the new five-year agreement will allow them to continue to work together. Zynga is currently testing Facebook Credits in some of its titles, and says it will expand to more in the months ahead. In addition to highly-popular FarmVille, Zynga also operates Mafia Wars, Cafe World and FishVille, among numerous others.
"We are excited about Facebook’s long-term commitment to social gaming and Zynga, and look forward to working with them and other platform providers to bring the best social gaming experience to users worldwide," says Zynga founder and CEO Mark Pincus.
“We are pleased to enter into a new agreement with Zynga to enhance the experience for Facebook users who play Zynga games,” adds Facebook COO Sheryl Sandberg.
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"With today's agreement, Facebook has said it will use its 30 percent cut to "[invest] heavily into the ecosystem."
..to mean that Zynga gets first cut at infrastructure features being built out, and a seat at the table in dictating the feature list of what those are.
Given the spend guys like Zynga have reportedly been making on ads to acquire users, any features that would let them better attract and keep customers and reduce that spend might be well worth the 30 point hit.