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The Tech News Blog

February 2, 2012

Zynga’s Virtual Cash a Big Part of Facebook’s Bottom Line

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There is an avalanche of new information about Facebook to sift through in the company's $5 billion IPO filing, but one number that's getting a lot of attention in the early going is 12 —as in the 12 percent of Facebook's 2011 revenue generated by just one company, Zynga.

Zynga contributed about $445 million to Facebook's balance sheet last year. The San Francisco-based social gaming house, which had its own initial public offering in December, appears to be Facebook's single biggest customer, though that's not directly stated in Facebook's Form S-1 registration statement filed with the SEC Wednesday.

What Facebook does say is that no customer accounted for 10 percent or more of the company's revenue in 2009 or 2010, so Zynga's 12 percent contribution in 2011 looks to be the record.

Facebook receives "substantially all of our revenue derived from Payments" via social game-related apps, the filing states. Such revenue comes from "developers of social games, particularly Zynga," the company goes on to say.

In the filing, Facebook tells potential investors that it sees a bright future in the monetization of virtual and digital goods traded by players of social games like Zynga's FarmVille, explaining:

"When users purchase virtual and digital goods from our Platform developers using our Payments infrastructure, we receive fees that represent a portion of the transaction value. Currently, substantially all of the Payments transactions between our users and Platform developers are for virtual goods used in social games, for example virtual tractors in the social game FarmVille."