Zynga 2011 Annual Report Download - page 12

Table of Contents
Our business would be harmed if:
We have benefited from Facebook’s strong brand recognition and large user base. If Facebook loses its market position or otherwise falls
out of favor with Internet users, we would need to identify alternative channels for marketing, promoting and distributing our games, which
would consume substantial resources and may not be effective. In addition, Facebook has broad discretion to change its terms of service and
other policies with respect to us and other developers, and those changes may be unfavorable to us. For example, in 2010 Facebook adopted a
policy requiring applications on Facebook accept only its virtual currency, Facebook Credits, as payment from users. As a result of this change,
which we completed in April 2011, Facebook receives a greater share of payments made by our players than it did when other payment options
were allowed. Future bookings and revenue may be negatively impacted if our current game card program is not extended beyond April 30,
2012. Our contract with Facebook allows us to continue to distribute our game cards until April 30, 2012. Facebook may also change its fee
structure, add fees associated with access to and use of the Facebook platform, change how the personal information of its users is made
available to application developers on the Facebook platform or restrict how Facebook users can share information with friends on their
platform. Beginning in early 2010, Facebook changed its policies for application developers regarding use of its communication channels. These
changes limited the level of communication among users about applications on the Facebook platform. As a result, the number of our players on
Facebook declined. Any such changes in the future could significantly alter how players experience our games or interact within our games,
which may harm our business.
We operate in a new and rapidly changing industry, which makes it difficult to evaluate our business and prospects.
Social games, through which we derive substantially all of our revenue, is a new and rapidly evolving industry. The growth of the social
game industry and the level of demand and market acceptance of our games are subject to a high degree of uncertainty. Our future operating
results will depend on numerous factors affecting the social game industry, many of which are beyond our control, including:
Our ability to plan for game development, distribution and promotional activities will be significantly affected by our ability to anticipate
and adapt to relatively rapid changes in the tastes and preferences of our current and potential players. New and different types of entertainment
may increase in popularity at the expense of social games. A decline in the popularity of social games in general, or our games in particular
would harm our business and prospects.
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Facebook discontinues or limits access to its platform by us and other game developers;
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Facebook terminates or does not renew our addendum;
• Facebook modifies its terms of service or other policies, including fees charged to, or other restrictions on, us or other application
developers, or Facebook changes how the personal information of its users is made available to application developers on the
Facebook platform or shared by users;
•
Facebook establishes more favorable relationships with one or more of our competitors; or
•
Facebook develops its own competitive offerings.
•
continued worldwide growth in the adoption and use of Facebook and other social networks;
•
changes in consumer demographics and public tastes and preferences;
•
the availability and popularity of other forms of entertainment;
•
the worldwide growth of personal computer, broadband Internet and mobile device users, and the rate of any such growth; and
•
general economic conditions, particularly economic conditions adversely affecting discretionary consumer spending.