Zynga 2015 Annual Report Download - page 19

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Table of Contents
Our business depends on our players and our player’s level of engagement is critical to our success. We lose players in the ordinary course of business.
Average MAU declined 30% percent from 98 million in the fourth quarter of 2014 to 68 million in the fourth quarter of 2015. Our financial performance will
continue to be significantly impacted if we continue to lose users. If we fail to sustain the number of our paying players, if the rates at which we attract and retain
players declines or if the average amount our players pay declines, our business will continue to decline and our financial results will suffer.
Alargeportionofourbusinessisdependentupon,andourbookingsandrevenuesarederivedfrom,theFacebookplatform,andFacebookinmanycaseshas
theunilateralabilitytointerpretitspoliciesandtermsandconditionsforapplicationsanddevelopers.*
Facebook is currently the largest payment platform for our games. To date, we have derived a significant portion of our bookings (24% in the three months
ended December 31, 2015) and revenue (28% in the three months ended December 31, 2015) and acquired a significant number of our players through Facebook.
Except for certain limited addenda, we are subject to Facebook’s standard terms and conditions for application developers, which govern the promotion,
distribution between us and Facebook and operation of games and other applications on the Facebook platform.
Our business may be harmed if:
• Facebook discontinues or limits our access to its platform;
• Facebook terminates or seeks to terminate our contractual relationship altogether;
• Facebook prohibits us from offering our games on the Facebook platform because it determines that we are a competitor or for other reasons;
• Facebook modifies its terms of service or other policies, including fees charged to, or other restrictions on, us or other application developers;
• Facebook makes operational changes to its platform that we are not able to adapt to our game offerings;
• Facebook changes how the personal information of its users is made available to application developers on the Facebook platform or is able to be
shared by users;
• Facebook modifies or interprets its terms of service or other policies in a manner that impacts our ability to advertise, either for our games or for third
party products or services;
• Facebook establishes more favorable relationships with one or more of our competitors;
• Facebook platform or purchasing functionality becomes unavailable for a period of time; or
• Facebook develops or acquires its own competitive offerings.
In addition, 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 or other factors cause its user base to stop growing or to shrink, we would need to identify alternative channels for marketing, promoting
and distributing our games, which would consume substantial resources and may not be effective, or available at all.
Facebook has broad discretion to change and interpret its terms of service and other policies with respect to us and other developers, and those changes may
be unfavorable to us. Facebook may also change its fee structure, add fees associated with access to and use of the Facebook platform, alter how we are able to
advertise on 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 or across platforms other than Facebook. If changes were made that were
detrimental to us, our business would be harmed and our operating results would be adversely affected.
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