Zynga, the widely known social-gaming company, has witnessed its shares drop as investors are reacting to a modified contract the company signed with Facebook.
Documents that submitted with the Securities and Exchange Commission (SEC) yesterday mention Zynga no longer requires displaying Facebook ads on its site, using Facebook Credits, or developing titles exclusively for the social network’s platform. The amended agreement was between the two companies.
The exchange for facebook is that Zynga won’t be authorized to market its games in other titles it’s developing that people are playing on the social network.
The news was a pretty big hit for investors. Zynga’s shares went down 6.5 percent to $2.45. The share price is up compared to its 52-week low of $2.09, though it’s far off from Zynga’s 52-week high of $15.91.
Zynga generates 80 percent of its revenue from Facebook, according to its latest earnings report. No one from each side has commented on how this new agreement will affect with their revenue, investors allegedly believe Zynga will be bombarded economically because of the modified arrangement.
Zynga, has been focusing its attention on mobile games and their relationships with third-party developers amongst the recent hit, is still offering some of the most popular games on Facebook even with the dwindle in their shares.
Just to let players know, the modified agreement between the companies likely won’t stop a committed CityVille player from continuing to play that game on the social network. The loss of the ability to draw those players to other Zynga games through cross-promotion, however, could prove troublesome.
Chief Revenue Officer Barry Cottle from Zynga yesterday issued a statement on the amended agreement, To allay fears saying that the deal will help Zynga achieve its overarching goals.
“Our amended agreement with Facebook continues our long and successful partnership while also allowing us the flexibility to ensure the universal availability of our products and services,” Cottle said.
