

Facebook, Zynga, and buyer-supplier hold up - minalecs
http://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up

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gruseom
I like how Chris Dixon incorporates stuff he learned doing an MBA into his
startup blog. Those are two different worlds and there aren't many people who
are fluent in both. I'm not very interested in the bulk of what MBA programs
teach; perhaps it's my ignorance, but it seems like a lot of voodoo that is
mostly about solidifying corporate culture with an elite caste of guess-who at
the top. But some of the ideas that Chris has written about that come from
there are quite interesting and relevant to our world -- his post on
commoditizing complements, for example -- so it seems like he's a pretty good
filter. (It's sort of a unique niche in the startup blog world, too.
Positioning?)

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mattmaroon
"App makers feel comfortable investing in the Apple platform and even having
most of their business depend on them in a way they don’t on Facebook or
Twitter."

I don't think that's true at all. The headaches on the iPhone platform are
many times larger, and the profit many times less. The smart money is in
Facebook games, by far. The amount of money invested in making Facebook apps
far exceeds that of iPhone.

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hugh3
Really? What about the longer term? I'm pretty confident that in 2015 you'll
still be able to make money by writing apps for iPods, iPhones et cetera; I'm
not so confident about facebook games.

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wheels
That's the wrong question. The question is not, "Will you be able to make
money on the iPad?", it's "Will anyone ever make a couple hundred million per
year (like Zynga has on Facebook) on the iPad?" In that sense, Facebook is the
clear winner.

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hugh3
Has Zynga really made a couple of hundred million a year? Have they even been
going for a year?

I don't see any reason why nobody could make a couple of hundred million a
year on iPod/iPad/iPhone apps, especially as the huge existing installed base
of iPods (over 260 million sold) will probably eventually churn into app-
capable devices like the current iPod Touch.

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wheels
Founded 3 years ago:

<http://www.crunchbase.com/company/zynga>

Estimated to have made ~$270 million last year:

<http://techcrunch.com/2010/05/03/zynga-revenue/>

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mattmaroon
It's kind of humorous to me that someone who doesn't even know about Zynga can
express an opinion on this topic.

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pwntifex
While 30% seems like a pretty ridiculous number, I don't think there is enough
data yet on if Facebook credits will hurt app profits or strengthen them.

One of the nice things about Apple's app store is you just click to buy, you
don't have to worry about giving your payment information to individual app
makers. I buy many more iphone apps than I would if I had to enter payment
information for each of them. Many of the smaller app makers I'm not sure I
would trust enough to give payment information to. Many also use more trusted
3rd party systems like PayPal, but they aren't one click experiences which
diminishes conversion.

If Facebook credits become the norm and are widely adopted, there could be a
significant uptick in consumers willing to pay for apps from the 1-3% which is
widely circulated.

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mark_l_watson
The FB developer APIs do make a nice platform. I did a little work a year ago
on a customer's Rails app to make it play nice with FB.

That said, I woud hate to base my business just on one platform that I did not
control. It seems safer to develop useful web apps and/or game web apps that
can integrate with FB, perhaps act as Wave components, and run on the
developers own servers.

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javanix
True, but in Zynga's case their audience is going to be drawn pretty naturally
to Facebook.

Even at "max diversification" of their platform, it seems unlikely to me that
losing their Facebook platform wouldn't be a crippling blow to Zynga.

How many 15 year old girls are really going to want to go to a completely
different site to play Farmville? 5%? 10%? Zynga's demographic primarily seems
to be whatever the exact opposite of "hardcore power user" is.

Granted, depending on how draconian Facebook's take is, that 5% or 10% might
be enough to make them more money, but that seems somewhat unlikely to me.

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dukehoops
I'd agree that the Apple app store is a pretty close comparison. However,
wonder how one would compare the value FB delivers for their 30% in fees to
the value, say, ebay delivers to the auction sellers for the ~3-5% (guess)
they charge in posting & paypal fees?

