Will Facebook Buy Zynga?

Today marks the opening of Facebook’s initial public offering on Wall Street.  With the opening price of stocks at $38 a share, the company is being valued at approximately $104 billion dollars; more than technology juggernauts Amazon.com and Cisco Systems.  And while investors are running out to grab the red-hot shares, I sit and ponder about their revenue streams.

Last year, casual games developer Zynga (noted for Facebook games such as Farmville, Mafia Wars, and more) accounted for 12%, or roughly $445 million dollars of Facebook’s revenue.  That’s a pretty large chunk of cash for Facebook, but the problem is that Zynga is seeking revenue streams outside of the social network, which could potentially lead to less money for Facebook.

Facebook is about to have a huge amount of cash on hand to lead to further innovation, and, (hopefully for the company and investors) more profitability.  But Zynga could be a large question mark in Facebook’s pocket-book if the company were to push their own casual gaming service and find a way to pull that revenue stream to increase their own profits (Facebook gets 30% of Zynga’s take in micro-transactions through their social network).  The smart thing for Zuckerberg and crew to do, would be simply to buy the company, which as of last May, had a market cap of $5.5 billion dollars.  It would allow those Zynga products to remain exclusive to Facebook, and instead of 30% of the take, the company could incorporate the whole enchilada.

This could actually be beneficial to both companies.  Zynga, as of late, has come under fire allegedly ripping off other developers intellectual properties, and has given them a bit of a black eye in the public relations department along with floundering stock prices.  Facebook’s purchase of the casual gaming service could restore some confidence in the company, while infusing them with cash to create more games, and increase micro-transaction revenues; all the while, giving Facebook a little bit more insurance on their revenue streams.

Those are just my thoughts.  So what do you think?  Hit the comments below!

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