The Zynga Conundrum


The oxpecker is an African bird that ekes out a living from the ticks that live on the backs of rhinoceroses. I imagine even it would be embarrassed by Zynga's dependency on Facebook.

That the details of the Zynga-Facebook relationship still had the capacity to shock--as they did when Zynga disclosed its financials in preparation for its initial public offering--underscores just how deeply the game maker's fortunes rely on Mark Zuckerberg's goodwill. Not only does Zynga derive "substantially all" of its customers and revenue (almost $600 million in 2010) through the social network, but in a five-year agreement that it signed last year, Zynga also promised to give Facebook a heads-up before it releases any new game on the social network and to grant Facebook exclusive access to those games.

Of course, Zynga is not alone. Silicon Valley is littered with companies whose fortunes are tied to what you might call "OPP"--other people's platforms. There are multitudes of Apple and Facebook app developers, Twitter clients, and Google-dependent content farms. These one-sided relationships rarely end well. So why do so many promising young developers resign themselves to building barnacles rather than great new ships?

Posted via email from Pete's posterous

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