Facebook Inc (NASDAQ:FB) is always facing a new challenge, and keeping its developers appears to be its latest one.
Rewind to last week and the social networking giant and Zynga Inc. (NASDAQ:ZNGA) decided to make things easier between the two with a revised contract. The initial terms had been set in May 2010 and now it includes the following highlights via AllThingsDigital:
- Zynga Inc (NASDAQ:ZNGA) will no longer be separately obligated to display Facebook ad units or implement Facebook credits on any Zynga game pages.
- Facebook will no longer be the exclusive social platform for Zynga, allowing it to launch games first on mobile, or its own Zynga.com platform (although the games will have to launch shortly after on Facebook).
- Certain provisions related to Web and mobile growth targets and schedules will no longer be applicable, and Facebook Inc (NASDAQ:FB) will no longer be prohibited from developing its own games. Further, Zynga’s right to cross-promote between games on the Facebook Web site will be governed by Facebook’s standard terms of service.
Now that Zynga Inc (NASDAQ:ZNGA) will have more latitude to develop games for other platforms, the playing field has been leveled a bit for Facebook's other developers and recently the company attempted to woo them with a sushi dinner.
Hosted by the company's CEO, Mark Zuckerberg, and top games boss, Sean Ryan, at the corporate headquarter's Fuki Sushi restaurant, the dinner included guests from the top social game companies on Facebook's platform, reported AllThingsD. Attendees came from King.com, Kixeye, The Walt Disney Company (NYSE:DIS)'s Playdom, Electronic Arts Inc. (NASDAQ:EA), and Kabam.
A range of topics supposedly had been discussed with the developers guiding the conversation. One highlight was ways to monetize games and different revenue sharing.
Presently, Facebook Inc (NASDAQ:FB) has a 30 percent charge for virtual goods sold inside of games similar to Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG). An idea of a sliding scale had been brought up at the meeting and it would enable developers just beginning on the platform to incur a lower rate, while big companies, such as Zynga, would keep paying the full price.
What this means is game developers would incur a tax determined by volume compared to a flat fee, regardless of the game's popularity. For Facebook, this could be an additional incentive to market future games.
Facebook has not commented on this possibility, but AllThingsD reported that per sources, the company has no plans to make changes in its revenue share agreement for payments.
But it doesn't seem too far out of reach, as its payments come from a small percentage of its big developers. In the third quarter, Zynga represented seven percent of Facebook's third quarter payments revenue, a decline from second quarter's 10 percent. After its earnings report, Zuckerberg conceded: ”Gaming on Facebook isn’t doing as well as I’d like.”
One other option for Facebook? Create its own social games, which isn't currently an option per its Zynga contract.
This isn't likely to happen, with a Facebook Inc (NASDAQ:FB) spokesperson stating to AllThingsD: “We’re not in the business of building games, and we have no plans to do so. We’re focused on being the platform where games and apps are built.”