Zynga Made Up 14% Of Facebook Revenues In 1H 2012, Down From 19% In FY 2011

Ryan has spent more than five years covering business, technology, and telecom-related subjects for a variety of publications based in New York and San Francisco. Ryan currently works as a writer for TechCrunch. ? Learn More

Here’s another nugget from the release of Facebook’s 10-Q today: Zynga accounted for 14 percent of its revenues in the first six months of 2012, but that number is down from the 19 percent of revenue that Zynga made up in 2011.

Revenues that Facebook collects from Zynga include payment processing for purchases made through its social games, advertising that third parties show on its gaming apps, and Facebook ads that appear on Zynga.com.

On the first two counts, Facebook is seeing marked declines in its exposure to Zynga’s performance: It reported that payments and direct advertising from Zynga accounted for 10 percent of its revenue in the first half of this year, down from 12 percent for the full year 2011. Display ad revenues from third parties that Facebook runs on Zynga’s social games also declined as a share of the social network’s overall business. Facebook reported that in the first half of 2012, approximately 4 percent of its revenues came from those display ads, which declined from 7 percent during fiscal 2011.

Meanwhile, Zynga’s launch of a social gaming network on its own site, Zynga.com, had little impact on Facebook revenues. While Facebook can display ads and Sponsored Stories on the site, the company said that it did not generate any meaningful revenue from those ads.

The decline in Zynga’s came as Facebook grew ad and other payments revenue in the quarter. But it also came as Zynga failed to meet analyst expectations in the second quarter. Zynga blamed Facebook in part, noting that the social network began emphasizing new games in its news feed and other channels, which led to a 15 percent decline for existing games.

For its part, Facebook’s reduced dependency on Zynga is probably a good thing. In the Risk Factors section of its 10-Q, it pointed to Zynga as a possible drag on revenues and stock price, if the social gaming company can’t get it together. “If Zynga does not maintain its level of engagement with our users or if we are unable to successfully maintain our relationship with Zynga, our financial results could be harmed,” it wrote.

Facebook is the world’s largest social network, with over 845 million monthly active users. Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard students. It was a huge hit: in 2 weeks, half of the schools in the Boston area began demanding a Facebook network. Zuckerberg immediately recruited his friends Dustin Moskovitz, Chris Hughes, and Eduardo Saverin to help build Facebook, and within four months, Facebook added 30 more college networks. The original...

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Zynga was founded in July 2007 by Mark Pincus and is named for his late American Bulldog, Zinga. Loyal and spirited, Zinga’s name is a nod to a legendary African warrior queen. The early supporting founding team included Eric Schiermeyer, Michael Luxton, Justin Waldron, Kyle Stewart, Scott Dale, John Doerr, Steve Schoettler, Kevin Hagan, and Andrew Trader. Zynga’s mission is connecting the world through games. Everyday millions of people interact with their friends and express their unique personalities through our...

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