Facebook depends on Zynga for 12% of revenue

Feb 1, 2012
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Facebook depends on Zynga for 12% of revenue

Facebook officially filed its IPO today and the documents reveal that the social network's $3.71 billion revenue in 2011 has been dependent largely on its successful partnership with Zynga. Although Facebook generates a majority of its revenue from advertising, Zynga is responsible for almost all of the network's "Payments" revenue, worth 12% of total revenue.

Revenue for the company is basically divided into two categories, the first being "Advertising" and the second being "Payments and other fees." Advertising accounted for 85% of revenue in 2011, versus 95% in 2010 and 98% in 2009. The Payments and other fees revenue comes from payment processing fees related to the sales of virtual goods through game apps, a majority of which are through those made by Zynga.

Zynga has developed a variety of popular games for Facebook, including Farmville, Mafia Wars, and Words with Friends. The company also purchases ads from Facebook and its games generate a significant number of page views that add to Facebook's advertising revenue. Hence, Zynga's importance to the social network is highlighted in the paperwork.

"If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected," said Facebook in its filing.


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