Facebook and Zynga - The Strained Relationship

{sidebar id=1}There is a vicious rumor going around that because Facebook is tightening up how it deals with game companies. The controversy was reported to of begun because of the all the notifications that would appear when even the smallest task was accomplished within the game of Farmville.

The second nail in the coffin is that Facebook is now allowing users to police their feeds, weeding out applications that they didn’t want to see messages from. Because of all of this drama according to Socialtimes.com in April, Farmville lost 4.4 million users because of excessive spamming and people removing Farmville from their feeds.

Farmville is now at 78 million monthly active users but it’s not the only application to lose traffic.

12 of the top 18 applications lost a large number of active users in April.  This is because of Facebook now requiring all financial transactions on the website to use Facebook Credits, an online currency that takes a 30% cut from all application profits.

Zynga is so upset because they make a lot of money by selling items that speed people’s progress through the game.

Virtual currency has not been accepted by the social networking community because people would have to pay for this currency, which defeats the purpose of free gaming.  Users would much rather earn currency by completing surveys or online shopping!

This just shows how powerful Facebook is becoming and it’s decisions about what makes a good or bad user experience has an effect on millions of users, and also millions of dollars for social application companies.

It has been known for quite some time that Zynga and Facebook have not been on the best of terms.  Zynga is Facebook’s number one game partner and advertiser, and Facebook is Zynga’s number one distribution channel.

But, when Facebook changed the rules by removing all game notifications from its update feeds and announcing Facebook Credits, they damaged an already strained relationship.

To counteract Facebook’s changes, Zynga has been slowly moving away from Facebook by launching Farmville.com - where people can connect using their Facebook usernames and passwords. Zynga is also utilizing MSN by enabling users to log into Farmville from MSN’s gaming portal.

Amongst these changes Farmville is also preparing for the day when you can play Zynga games completely off Facebook. But in an effort to work within Facebook’s new rules, Zynga has prepared an email list to send direct email notifications to its users and added in-game communication features.

This was a very successful campaign because participants were given in-game rewards like an extra horse or barn for giving them your email.

Despite all of this, Zynga is projected to earn $450 million in revenues off of micro-transactions in 2010, giving up 30% to Facebook, which is a large amount of cash to give back. But, with 120 million players a year and growing, a huge amount of investment, and 775 employees, Zynga may be big enough to be different and gamble on leaving Facebook.

According to PCworld.com, If Zynga leaves Facebook completely, as the company has reportedly threatened, it would be suicide. Farmville is not a strong enough game to stand on its own. It needs the social structure of Facebook more than Facebook needs Zynga.