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Facebook Shares Ad Rev With Zynga

Potentially boding well for Zynga -- and potentially not -- Facebook has committed to share ad revenue with the social gaming leader, and help it meet certain active user targets, according to an addendum to Zynga's S-1 filing with the SEC.

"The fuller disclosures could be a positive for potential Zynga investors," All Things D reports. Yet, "It might not be a good sign that Zynga neglected to leave details of such a significant relationship out of its original and supposedly exhaustive financial disclosure packet.

"It almost makes Zynga into a Facebook subsidiary," in the words of Business Insider. As such, "Zynga's Facebook risk is enormous. Zynga is basically Facebook's outsourced games arm. Paradoxically, it might be good for the stock short-term, because Facebook is still private and owning Zynga is even more a proxy for owning Facebook, so investors could pile in."

It was previously known, as All Things D notes, that Zynga had committed to a five-year term of exclusivity with Facebook Credits last summer for its games built on the Facebook platform. "So far, Facebook seems to be getting the better end of the deal," suggests Softpedia. "But Zynga has several advantages as well. For one, it gets a cut of the advertising revenue for ads ran next to its games on Facebook."

"What's more," Softpedia adds, "Facebook has to help Zynga meet several growth targets for games part of the deal. Again, the exact numbers are unknown, but whatever Facebook is doing, it's working since Zynga launches break record after record."

Facebook already netted an estimated $83.7 million in the first quarter of this year, as its 30% cut of virtual goods sold by Zynga, and brings in tens of millions per year in additional revenue from Zynga advertising its games on the Facebook platform. "But, as All Things D points out, "the exclusivity goes much further than that."

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