It seems Zynga is eager to explore the other world besides Facebook, as it renegotiated its partnership agreement with Facebook, according to which Facebook will treat Zynga like any other developer and this agreement set to expire on May 13, 2015. The move is largely being considered as an effect of Zynga’s constantly dropping share price and market valuation which is worrying Zynga’s management and investors both.
While Zynga got traction from market at $10 share price at the time of IPO, which went high upto $16 in March when Facebook launched its own IPO. However, due to recent blow ups that got the share price tumbling down to $2.29 and in Q3 company reported loss that bowled up the whole situation for Zynga.
So, what are the main ingredients of the new arrangements and who are actually losing ? Here are positive and negative aspects for Zynga can be:
Interestingly, Facebook is not completely reliant on Zynga, but surely investors confidence may suffer as the stocks of Facebook are also unstable after this deal and those who rely on Facebook mostly for games may not stick to Facebook platform only. According to the new deal Zynga is less tied to Facebook and one of the reasons could be the users itself as the most popular games by Zynga saw down fall and it lost millions of users. Also, the reduction in gaming by Facebook users reflects the fluidity of social media usage.
Zynga has explicitly said that they give less importance in retaining players but more focused in attracting new ones, as it’s a free bird now to fly to the new platforms, will it make up to attract new players or will this agreement leaves Zynga repent is a mystery.
As Facebook is platform where apps and games are built but it should not be a big deal for Facebook to get another Zynga.