Zynga will soon Yahoo!, but don’t count your FarmVille chickens before they hatch

As reported on Gamezebo this morning, Zynga and Yahoo! announced a partnership that will enable you to play and get updates for your favorite Zynga games (FarmVille, Mafia Wars, Treasure Isle, etc) through the Yahoo! Network of web sites, including the Yahoo! home page, Mail, Messenger, and Games.

If done right, this is potentially a huge deal for both Yahoo! and Zynga. Yahoo! is still a leading web property with the most trafficked web page on the Internet (home page) and most popular online mail product in the US. If it’s done right.

Zynga just finished bruising negotiations to sign a five-year expansion deal with Facebook. In the midst of negotiations, they (and their investors) must have realized how vulnerable their distribution position is.

The big question is if this is done right. Let the record show that Zynga announced a similar deal with MSN last year and as of now, you can’t play FarmVille on MSN. And if you can, they are doing a horrible job promoting it because I could not find it on any Microsoft page.

Specifically to Yahoo!, the press release announces the intention to integrate Zynga’s games into various Yahoo! properties. But, the devil is in the details. In the bureaucracy that is Yahoo!, each of these properties (Games, Mail, Messenger) represent different fiefdoms with different systems. To integrate Zynga’s games and updates into each of these properties and have it all mesh together is easier said than done. I’m sure Yahoo! Application Platform will help. Still, I suspect that it will be months before you can play FarmVille or Treasure Isle on Yahoo!

In addition to an actual timeline of when you’ll be able to play Zynga games on Yahoo!, the other big piece of information missing in the press release were the actual numbers.

How much is Zynga paying to integrate its games in Yahoo! Is Yahoo! asking for a revenue share like Facebook is with its credits, and if so, is it less than 30%? Is Zynga paying Yahoo! a guaranteed amount of money to be promoted within Yahoo!’s network including its front page? These are questions every single social game developer wants to know as they look for ways to distribute their games beyond Facebook.

I have to assume that Yahoo! is getting paid a revenue share and a huge ad buy exposing its millions of users to Zynga’s games, given the fact that Zynga spends millions of dollars daily on Facebook.

If Yahoo! is distributing Zynga’s games to showcase how “social” they are, then they just gave the farm away for free and made a huge strategic error. The number one way for any leading Internet company to make money in the future will be through casual and social games.

If Zynga is indeed not paying Yahoo! any money for this distribution deal, they just signed the deal of a lifetime. That is, of course, if they can ever get their games actually up on Yahoo! anytime soon.

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