Zynga helped Facebook become a social media giant, and the two were seen as dependent on one another for growth at one point in time. But when Facebook felt it did not need Zynga or any other gaming company, it cut the cord. The same could happen or is happening with publishers, reports Harrison Weber of VentureBeat.
Zynga and publishers – what’s common between them?
“In hindsight, Zynga’s business never really made sense,” says Weber. When the game maker filed for IPO in 2011, “the company hinged on fads (online farming?) and owed its existence to Facebook.”
Zynga’s market cap was over $10 billion March 2011, and now it’s just over $2 billion.
Carlson Capital's Double Black Diamond fund added 3.09% net of fees in the second quarter of 2021. Following this performance, the fund delivered a profit of 5.3% net of fees for the first half. Q2 2021 hedge fund letters, conferences and more According to a copy of the fund's half-year update, which ValueWalk has been Read More
As flaws in Zynga’s business model began to show up in 2011, the media industry’s obsession with Facebook is “becoming painfully clear” in 2016. Publishers struggling with print’s decline turned to the social media giant for help. With CEO Mark Zuckerberg’s aim of making Facebook the world’s newspaper, soon “publishers and aggregators grew dangerously dependent” on the platform, says Weber.
The team behind Facebook’s News Feed worked hard to make sense of this massive flood of content from publishers, but every time it has “nudged, pushed, and knocked back publishers’ advances,” several publishers, usually the major ones, have been impacted. In a recent nudge, the social networking giant annoyed publishers when it announced plans to show more posts from friends and families to users.
Facebook admitted that this update “may cause reach and referral traffic to decline for some Pages.”
Publishers to blame themselves
It is not that Facebook does not need publishers anymore but that “it just needs them a little less,” says Weber. The main issue is that each time it reduced its dependence on publishers, they “need Facebook that much more.” As the company offers them any lucrative offer, they “leap towards it,” the writer says.
With Instant Articles, the company promised media companies more eyeballs, sort of suggesting that it would take care of everything so publishers need not worry about “website, your engineers, or your sales team — Facebook can provide all of that, as long as it sees fit,” or until there is a change in the algorithm, says Weber.
Facebook now exercises more control over the news than the publishers themselves. The credit for this goes to the publisher who didn’t care as Facebook diverted a lot of print ad revenue which once belonged to them towards itself. As the social giant continues to distance media businesses, we could expect “another messy divorce in which Facebook again comes out on top,” says Weber.