Facebook And Zynga Enter Into Five Year Partnership, Expand Use Of Facebook Credits

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Facebook and Zynga have just announced a five year partnership and the expansion of use of Facebook Credits in Zynga games.

After months of discord, Zynga and Facebook have made peace– at least for now. Despite Zynga’s earlier frustrations and reports that it was ready to abandon Facebook, the two companies were able to agree to a “five-year strategic relationship.” “Facebook was a pioneer in opening their platform in 2007 and in just three years tens of millions of Facebook users play our games every day, from FarmVille and Café World to Treasure Isle and Mafia Wars,” Zynga CEO Mark Pincus said in the press release. “We are excited about Facebook’s long-term commitment to social gaming and Zynga, and look forward to working with them and other platform providers to bring the best social gaming experience to users worldwide.”

Although Zynga and Facebook are now tied together for at least the next five years, don’t expect Zynga to abandon its Zynga Live project and other avenues that will help it grow more independent of the social networking site. We hear that the game developer is still ramping up for its independent projects.

Another interesting part of the announcement is the expansion of Zynga’s use of Facebook Credits, the social network’s virtual currency. Zynga and Facebook most recently sparred over Facebook’s Credits initiative. As the only payment platform on the site, Facebook would slice 30% off publisher revenues (which is the standard cut for Facebook). Zynga was of course trying to negotiate to lower Facebook’s cut. Negotiations between the two were “intense,” according to our sources, with Facebook threatening to shut down Zynga games altogether. It’s unclear what the breakdown is for the new agreement and if Zynga managed to lower Facebook’s percentage but surely this new partnership should bring in more revenue for Facebook, considering that Zynga is a cash cow for virtual goods. According to a source, Zynga was able to win some concessions, the company walked away pleased with the deal.

See the release below:

Facebook and Zynga announced today that they have entered into a five-year strategic relationship that increases their shared commitment to social gaming on Facebook and expands use of Facebook Credits in Zynga’s games. The agreement provides a solid foundation for both companies to continue to work together to provide millions of people with a compelling user experience for social games.

“Facebook was a pioneer in opening their platform in 2007 and in just three years tens of millions of Facebook users play our games everyday, from FarmVille and Cafe World to Treasure Isle and Mafia Wars,” said Mark Pincus, founder and chief executive officer at Zynga. “We are excited about Facebook’s long-term commitment to social gaming and Zynga, and look forward to working with them and other platform providers to bring the best social gaming experience to users worldwide.”

“We are pleased to enter into a new agreement with Zynga to enhance the experience for Facebook users who play Zynga games,” said Sheryl Sandberg, chief operating officer at Facebook. “We look forward to continuing our work with Zynga and all of our developers to increase the opportunities on our platform.”

Zynga is currently testing Facebook Credits in select games and will expand to more titles over the coming months. Terms of the agreement between Facebook and Zynga were not disclosed.

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