Zynga, the company behind some of the most popular social games on the web, announced this week that it was working on a new venture called Zynga Direct (known internally as “Project Z”), an independent gaming platform that would allow Zynga to bypass third-party platforms, most notably Facebook. At almost the same time, however, Zynga was launching updated, integrated versions several Facebook games on the brand new Facebook Platform for Mobile.
The timing of the two developments makes for an odd juxtaposition. On the one hand, Zynga’s dependence on Facebook is in stark relief — it was one of a handful of game developers to launch supported HTML5 web apps within the first few days following the launch of the mobile Facebook Platform. On the other hand, Zynga is clearly trying to lessen their dependence on Facebook and take their games directly to mobile users by utilizing HTML5 and related web technologies to create their own platform.
While it’s too easy to say for certain, Facebook’s new mobile platform may end up being the “walled garden” of HTML5 mobile games. Like Apple’s walled garden for native iOS games, developers may balk at the restrictions and fees that come with distributing games on a third-party platform. The same issues that have caused numerous high-profile publishers and game developers to switch to HTML5 apps and abandon native apps in the App Store are popping up yet again in the relationship between Zynga and Facebook.
Like Apple and the App Store, Facebook levies a 30% fee on any revenues that developers and publishers earn from subscriptions and purchases made in their apps and games. Facebook Credits are the currency of the Facebook Platform, and the program is an easy, secure way for developers to collect payments. However, like the App Store, Credits are the only game in town — no other payment system is permitted. Facebook, after all, wants its 30% cut.
From Zynga’s perspective, this causes problems. Their success in creating social games has been truly astonishing over the past several years. FarmVille, MafiaWars, CityVille, Zynga Poker, Words With Friends — many of the most popular games on Facebook are the work of Zynga. And it would be hard to make an argument that this success could have been accomplished without Facebook. Facebook’s huge user base is a gold mine for game developers, especially since the central aspects of the games involve inviting and interacting with other users. In short, Zynga needs Facebook more than Facebook needs Zynga.
Zynga is trying to change that dynamic. Zynga Direct is their attempt to break free of the 30% fee that goes to Facebook every time a user purchases an item or upgrade in one of their games. With 60 million daily users and an IPO filing of $1 billion, Zynga seems to be calculating that its heavy reliance on Facebook may be costing them money hand-over-fist. They see a chance to extend their reach past Facebook, and may just have the resources to do so. Whether users follow is another question.
Zynga is still going to develop Facebook games and rely heavily on the social network for distributing its games to the largest audience on the planet. But that doesn’t mean Zynga won’t be exploring other opportunities to decrease the company’s dependence on Facebook. Zynga Direct is a clear indication of that.