Regulatory filings may not be the most exciting read, but buried in the papers of social gaming giant Zynga (Farmville’s creators) there’s a giant 30% commission to Facebook for the virtual goods sold. That’s $83m in the first quarter of 2011. Here’s why it matters to investors and social media stakeholders…
In May 2010, Zynga and Facebook resolved a dispute over the implementation of the universal Facebook Credits system by establishing a five-year agreement, under which Zynga would adopt the new over-arching currency in its games, with Facebook receiving a cut of the profits.
According to technology blog All Things Digital, the new filing reveals that in addition to committing to Facebook Credits, Zynga has agreed to allow any game it builds with Facebook integration or data to become exclusive to the platform “for the duration of the agreement”.
Titles currently listed in the exclusivity agreement include FarmVille, PetVille, FishVille, Treasure Isle, Mafia Wars, YoVille, Cafe World, and Live Poker.
The agreement also notes that Zynga cannot release its titles on a list of several redacted rival social networks, though the company has permission to release games based on email or SMS.
In addition, Zynga has agreed to inform Facebook of any new games on the platform at least a week before launch, and exclusivity terms apply to these titles as soon as they go live.
To hold up its own end of the bargain, Facebook has committed to help Zynga reach “certain growth targets for monthly unique users of Covered Zynga Games,” and the S-1 filing implied the company will share an undisclosed cut of the revenue if Zynga creates ads within its games.
