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Social gaming plays a big role in Facebook success

Social gaming plays a big role in Facebook success

By Alex Larrabee | Posted - Feb. 6, 2012 at 8:46 p.m.



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SALT LAKE CITY -- Facebook's initial public offering of $5 billion has garnered interest in what causes the site to be so financially successful.

One of the primary revenue sources appears to be virtual crop harvesting.

Zynga, the studio behind popular Facebook social games including FarmVille and Mafia Wars, has reported that it accounted for 12 percent of Facebook sales in 2011 -- around $445 million, the majority of which came from in-game purchases and advertising.

Almost all of the games playable via Facebook come free of charge, but offer special incentives and in-game perks that are available for purchase. These purchases can be made by using Facebook Credits, which act as a sort of transactional medium for customers who may feel more comfortable making a purchase indirectly, rather than through their credit card or PayPal account.

The revenue brought in by the sale of Facebook Credits amounted to approximately $550 million. Zynga accounted for 68 percent of that amount.


The revenue brought in by the sale of Facebook Credits amounted to approximately $550 million. Zynga accounted for 68 percent of that amount.

While Facebook would certainly survive without social games, the significance that Zynga plays in the company's financial success cannot be understated -- and Facebook doesn't intend to do so.

"If the use of Zynga games on our platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant platform developer and our financial results may be adversely affected," Facebook stated in an official release.

The mutually beneficial relationship manifested itself on Wall Street, as well. Zynga, which also recently went public, has seen a rise of over $5 per share in their stock price after the Facebook IPO was announced. The studio ended the week trading at $13.39, with an 8 percent bump on Friday.

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Alex Larrabee

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