Zynga Inks Five-Year Deal with Facebook and Partners with Yahoo

Zynga has inked a five-year deal with Facebook in attempts to patch up their strained relationship. The details of the deal are not available yet, but the negotiations to get there show two companies definitely at odds with each other. While both companies have benefited from their close relationship up to this point, it seems that the Zynga gaming platform has grown beyond simply being a part of the Facebook experience.

Games are an easy way to make any site sticky and keep users coming back. Services like Foursquare, 12seconds, robux generator and Glue have shown how integrating some level of gaming, achievements, and competition, can help your user base grow. Facebook games are a huge part of the site’s attraction as many users are mostly there to play Cafe World, Sorority Life, and Farmville.

Sources say that Facebook was pushing for a long-term deal with Zynga, but the terms were in Facebook’s favor. One major sticking point was Facebook forcing Zynga and other apps to use Facebook Credits as their only virtual currency. Not only that, but Facebook takes 30% cut off the top for Facebook Credits transactions. This is bordering on robbery for Zynga, who already showed they can make huge sums of money in virtual goods on their own when they raised over $1 million for Haiti.

Even after both parties threatened to part ways, they eventually came to an agreement. The question is whether they have patched things up, or are following the old saying of keeping friends close and enemies closer. At this point, it doesn’t seem that Zynga really needs Facebook’s cooperation to be successful. It actually seems that Facebook might be more dependent on Zynga’s games than Zynga is on Facebook’s social network. In either case, both parties still gain some benefit by being connected. Facebook gets the benefit of return visitors and a slight influence over Zynga’s direction while Zynga remains entrenched in the hottest social networking site out.

Zynga has already been making moves to exist outside of the Facebook ecosystem. They definitely plan to have their cake and eat it too. They have Farmville.com up and running with plans to launch a social game network called Zynga Live. They have also recently entered into a partnership with Yahoo, which could connect their social gaming platform with 600 million Yahoo users. It’s clear that Zynga’s games won’t be buried somewhere on the site, but will be tightly integrated into most of Yahoo’s current services and probably end up on it’s front page.

The once modest gaming platform is doing big things these days and one thing here is clear: Zynga is playing no games.