Zynga, the titan of time-wasting, is broadening its distribution base with a new social network called “Zynga With Friends,” where players can build profiles and connect with other players while wasting epic amounts of time, according to the company, which announced the plans on Tuesday. In addition to giving gamers a new go-to destination for flushing their lives down the toilet, the move is interesting because Zynga With Friends will be an alternative to Facebook, where most Zynga games are currently played.
Indeed, it’s worth noting that Zynga With Friends replicates many of the features and capabilities offered by Facebook, including profiles with pictures and interests, messaging, chat, and status updates. It also offers real-time multi-player mode, for simultaneous collaborative game-playing. Zynga With Friends can be accessed via multiple platforms, including laptops, smartphones, and tablets. In a bid to spread buzz and build traffic, the company is opening Zynga With Friends to other game developers, including Phospher Games, Sava, Crashlab, Fatpebble, and Atari (yes, you read that right: Atari is producing a game for Zynga to commemorate its 45th anniversary).
Zynga has long hinted that it would like to lessen its dependence on Facebook, which takes a 30% cut of revenues generated through sales of virtual goods to casual gamers. These revenues, in turn, still make up a substantial part of Facebook’s bottom line -- some 11% of total revenues in the first quarter, plus another 4% from advertising on Zynga games. While Zynga still relies on Facebook’s payment system for sales on its own site, strengthening its own site may be a preamble to setting up its own payment system, heralding the end of revenue sharing with Facebook (at least for games played outside Facebook).
That would be more bad news for Facebook, which is struggling to demonstrate sustainable growth to Wall Street analysts and investors. If advertising revenue growth continues to slow, this would leave Facebook all the more dependent on revenue streams like Zynga’s virtual goods sales -- just as Zynga is pulling away.