Sat, Mar 03, 2012 - Page 10 News List

Zynga seeks own game space away from Facebook

Reuters

Zynga Inc is launching a new games service that allows users to play on the company’s Web site instead of Facebook, potentially driving traffic away from the world’s No. 1 social network that is its biggest partner.

The service is the online game company’s boldest move yet to create a presence outside of Facebook, where it makes 93 percent of its revenue.

Investors sent Zynga’s shares up 10 percent to US$14.48.

“Zynga is building their own Web-based platform, which makes them a bit more independent and creates a brand for them outside of Facebook. But it doesn’t really cut the cord with Facebook, and it won’t have a dramatic impact on their margins,” Baird Research analyst Colin Sebastian said.

Zynga’s re-designed Web site, which will come online later this month, makes it easier to play games more quickly with access to live chatting and message board features where players can ask for help.

Five of Zynga’s top games will be on the new Zynga.com, including CastleVille, CityVille and Words with Friends, the company said on Thursday.

Zynga chief operating officer John Schappert said in an interview that players could find opponents to play games with who they are not friends with on Facebook.

However, the so-called Zynga Platform is closely tied to Facebook in other ways: Users still need to log in using their Facebook IDs and sales from virtual goods in games, such as houses or other items, will be traded using Facebook Credits, the social Web site’s payment system.

“You will still pay Facebook for buying an extra tractor,” Hudson Square analyst Dan Ernst said.

Facebook, which has 845 million users, keeps 30 percent of revenue generated from Facebook credits. Zynga executives declined to comment on whether the company would ever sell items on its platform without paying Facebook a cut.

Zynga.com general manager Manuel Bronstein said the new Web site was not intended to migrate users away from Facebook. It will help users keep their Facebook profiles separate from their gaming habits, while bringing Zynga closer to its users, he said.

“If they want to play on Facebook, if they play on mobile, if they play on the Web, I want them to be connected to Zynga and it cannot be constrained to one single destination,” Bronstein said.

Playing games made by Zynga and Electronic Arts is one of the most popular activities for users on Facebook, which plans to raise US$5 billion in an initial public offering expected to value the company at US$75 billion to US$100 billion.

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