Why game developers hate the Facebook-Zynga marriage, and how Google+ can benefit
But for the smaller developers on Facebook, the Zynga-Facebook deal is a sign that Facebook isn’t being fair to all comers?
Facebook game developers were furious when they found out about the tight relationship between Facebook and Zynga.
If Google properly channels that anger, it could find considerable support for the idea of making games that run on its new social framework, Google+. The question is whether that anger is justified – and the answer isn’t crystal clear.
“It’s actually a level playing field,” Rose said in an interview. “Everybody on the platform is playing by the same rules, whether that is from an economic perspective or a distribution perspective.”
“We all knew Zynga had contractual advantages, but the extent of it makes Facebook a tough platform for everyone else,” Hawkins said. “Policy changes have made revenue and margins more challenging this year, so it is a bitter pill for all of us to find out that the market is neither competitive nor fair. Their relationship could not be more complicated. It’s like a bad marriage is staying together for the money. You don’t get the feeling that either side really feels happy or free. Ironically, they could both use more real friends.”
Zynga already has enormous advantages over other developers on Facebook, with more than 264 million monthly active users on the social network, more than the top 15 other game companies combined.
But what’s really making developers angry is a new disclosure by Zynga filed with the SEC, which shows that Zynga gets benefits that apparently no other game company gets. In the filing, Zynga said that it received a special deal when it agreed to support Facebook Credits, a new virtual currency from Facebook, a year ago. In that deal, Zynga agreed to give 30 percent of its virtual goods game revenues to Facebook, the standard fee for using Facebook Credits.
“Were developers misled?” said another source from a social-game maker. “The unequivocal answer is yes. In meetings with us, they told us there was nothing to the agreement that was not available to other leading social game developers. That’s patently not true. We look at the agreement and it does not allow a level playing field.”
From Facebook’s point of view, the favoritism isn’t as bad as what some platform owners have done in the past. Console makers, for instance, typically have their own first-party (in-house) game studios that get access to information about a new console far earlier than third-party developers. That allows the first-party game makers to get a head start. Facebook has no such first-party studios.
Developers have also heard rumors of other examples of favoritism. Zynga, for instance was reportedly allowed to issue more invitations to gamers to join a social game than other developers were allowed to send, according to one executive at a Facebook game developer. But Facebook’s policy on invites depends on whether the users embrace or reject the invitations. If users reject more invitations from a certain game, then the number of invites that game can send will be reduced, according to conversations that game companies had with Facebook.
Google, as we noted in our other Google+ story today, has yet to come up with an applications programming interface, or API, which sets the rules on how to create a game that sits on top of Google+. Google would be smart to create a smaller royalty — perhaps 20 percent or lower (as is rumored) — to attract game developers who don’t want to share 30 percent of their revenues obtained via Facebook Credits.
Hawkins said, “Google is a major force in the industry and could drive important innovations with Google+. When there are alternatives and different approaches it makes things more competitive and keeps everyone on their toes. These new industries are still in the first inning, so much remains to be decided. Every major participant has great opportunity and will make many good moves, and also bad ones from which they will need to retreat or recover. Whoever goes down their learning curve with a humble attitude will adapt fastest and be likely to win.”