Why is Zynga leaving Facebook? To be Facebook.

In the past week, there have been many theories about why Zynga may be leaving Facebook.

Facebook is upset about Zynga’s past abuse of its system and Zynga is upset that Facebook changes to its system have resulted in significant drop in game traffic. Facebook is forcing Zynga to accept Facebook credits and Zynga does not want to pay Facebook 30% of its revenues. It’s all a negotiating ploy.

Here’s another theory: Zynga’s plan to leave Facebook has nothing to do with the above and is part of its grand scheme to create its own social network. Zynga does not want to leave Facebook; they want to be Facebook. And they may have numbers, products and strategy to pull it off.

It’s easy to see what Zynga has to lose by leaving Facebook – most of its users and revenues are derived from Facebook. Looking at the numbers, however, you can see how much Zynga has to gain.

According to Appdata, Zynga’s games attracted 240 million monthly active users (MAU’s) over the last 30 days (April-May 2010).

That’s smaller than Facebook (484 million users per month) but bigger than Facebook’s social network competitors:

  • MySpace: 113 million user per month
  • Hi5: 50 million users per month
  • Tagged: 25 million users per month

If Zynga were to move its 240 million users to Zynga Live, they would be the second largest social network in the world, half the size of Facebook and twice as MySpace.

That’s a big “if.” There is no way they will be able to bring 240 million users to Zynga Live.

But, if they converted 20% of their user base to Zynga Live, they would have almost 50 million users instantly, making them one of the largest social networks overnight and a competitor to Facebook in its own right.

Now imagine the following:

  • Zynga creates an open API allowing game companies to plug into Zynga Live, taking a more open approach than Facebook. They take a 15% cut instead of Facebook’s 30% cut.
  • Zynga takes its millions of dollars it spends on direct marketing and spends a portion of that on brand advertising. That can erase the whole “trust” issue that plagues Zynga (and rightfully so). Toyota sold cars with no brakes, spent a billion in advertising, and people still think that their cars have the highest quality.
  • Zynga goes public with a valuation as both a social game and social network to compete with Facebook. Their valuation skyrockets and they raise an insane amount of cash to compete with Facebook.

Keep in mind other social game companies such as Playdom, Playfish/EA, and others could pull this off (but to a lesser degree) just as well.

The key advantage that Zynga will have if they pull this off is that unlike Facebook, they actually get games.

Facebook is the No. 1 social network in the world because they have continuously innovated the marketplace through its application platform, international expansion, and willingness to open its platform to outside business (a walled garden approach with no locks to the gates). When they do make mistakes, they are quick to admit fault and fix.

In doing so, they have accidentally revolutionized the gaming world and have created a potential multi-billion dollar business for them and their gaming partners. They understand how important they are to the social gaming equation and asking rightfully for a fair cut of the action.

What they don’t seem to get is how important gaming is to their business. Facebook’s social plug-ins and open graph initiatives are awesome but games drive the business. By negotiating in such a heavy-handed way, they risk not only chasing their big game partners away but opening the floodgates to a slew of potential competitors that can give them a run for their money.

It’s a huge miscalculation and could cost them a lot more than just losing FarmVille. In the future, it may cost them their mantle as the #1 social network in the world.

Content writer

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