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Right now, social-game maker Zynga (Nasdaq: ZNGA ) needs Facebook. As hard as it's trying to diversify its platform base into mobile arenas like Apple (Nasdaq: AAPL ) and Google (Nasdaq: GOOG ) Android, the company still relies on the social networker for "substantially all of our revenue and players," according to its prospectus. On the flip side, Facebook chalks up just 12% of sales to Zynga.
A recent report from IHS iSuppli paints a gloomy picture for Facebook's gaming platform, which by proxy will weigh on Zynga's results, as if Zynga's revenue pipeline wasn't already drying up. Facebook's gaming platform showed stellar growth in 2009 and 2010, but 2011 wasn't so kind, as gamer numbers stagnated.
According to IHS figures, half of Facebook's monthly active users, or MAUs, in 2010 were gamers, but that portion fell to just a quarter in 2011. The sheer number of gamers didn't change much, but it wasn't able to hitch a ride on Facebook's growing MAU base, which stood at 845 million at the end of 2011.
IHS estimates that Zynga's Facebook-related MAUs fell from 266 million in the third quarter to 225 million by the end of the fourth quarter. Zynga's fourth-quarter release pegged MAUs at 240 million, but that difference could potentially be iOS and Android users.
The rising acquisition costs make it more important to boost retention and monetization, which ties in to delivering higher quality games as the platform matures. The market is trending toward games that require more skill and engagement, and growing crops in FarmVille gets old after three years. By "non-specialist," IHS means that Facebook's platform goes beyond games, which can divert users' attentions to non-gaming apps.
At least Zynga has been actively trying to move more into mobile platforms and wean its reliance from Facebook, primarily by branching into iOS and Android. Judging by the current trajectory of Facebook's gaming platform, as IHS puts it: "The honeymoon's over."
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