Facebook makes 60% of its revenue from game applications and Groupon

Image representing Zynga as depicted in CrunchBase
Image via CrunchBase

Facebook does not seem to have a very large advertising footprint. In fact, it relies in great measure on two major partners, Zynga, the producer of Farmville, and Groupon. Gaming and group buying partners are responsible for 2/3rds of Facebook’s revenue. While Business Insider spins this as a positive thing, thinking that this is just a beginning for a longer campaign of recruiting new app makers, this could also be a very problematic situation. What if Zynga or Groupon decide to look for customers somwhere else? What if Zynga sinks under the weight of its business practices?

Groupon and all its clones buy lots of Facebook ads – about a third of all the ads Facebook sells, in fact, a source at a Facebook-ad buying firm tells us. Zynga and the other social games publishers buy another third. These gamesmakers also pay a 30% tax to Facebook for use of its credits system. Facebook revenues from the games business was around $400 million in 2010, we recently heard.So, what does this tell us about Facebook?It tells us that Facebook is not really in the advertising business. It’s also not really in the virtual currency business.

via Facebook’s Plan To Make A $50 Billion Valuation Look Cheap.

Sorin Adam Matei

Sorin Adam Matei - Professor of Communication at Purdue University - studies the relationship between information technology and social groups. He published papers and articles in Journal of Communication, Communication Research, Information Society, and Foreign Policy. He is the author or co-editor of several books. The most recent is Structural differentation in social media. He also co-edited Ethical Reasoning in Big Data,Transparency in social media and Roles, Trust, and Reputation in Social Media Knowledge Markets: Theory and Methods (Computational Social Sciences) , all three the product of the NSF funded KredibleNet project. Dr. Matei's teaching portfolio includes online interaction, and online community analytics and development classes. His teaching makes use of a number of software platforms he has codeveloped, such as Visible Effort . Dr. Matei is also known for his media work. He is a former BBC World Service journalist whose contributions have been published in Esquire and several leading Romanian newspapers. In Romania, he is known for his books Boierii Mintii (The Mind Boyars), Idolii forului (Idols of the forum), and Idei de schimb (Spare ideas).

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