Rumors have been flying around that Zynga, the hugely popular social gaming company that has seen wild success on Facebook, will start charging $5.99 a month for access to their most popular game Farmville.
Now, as we should have assumed, these rumors have been proven false by a company representative and there seems to be no intentions of switching to a pure subscription service. After all, with 75 million users (which represents a whopping 5.3% of active Facebook users) an e-mail stating that Zynga will simply start charging for Farmville isn’t that great of a transition, especially when the transition is dated to happen on March 31st, you know, the day before the most loved internet holiday.
But it does propose an interesting question, can Zynga rely on their current business model which is based on selling controversial offers and virtual goods?
According to Mark Pinkus, Zynga is doing just fine and has remained profitable for eight straight quarters, but not quite profitable enough to go for an IPO which has been a reoccurring rumor for the better part of 2010. While I am sure the being simply “profitable” enough is good in Zynga’s eyes, the Valley has been begging for an IPO, at least for an ego boost and morale for other startups planning to make it big. To accomplish this, maybe Zynga will go for an increasingly popular business model being adopted by more and more businesses every day, freemium.
Many other web services have chosen to adopt this business model, most notably, Flickr, GetClicky, and the popular WoW knock off RuneScape. Seeing as all these services have stood the test of time, I will take the liberty to assume that with a mixture of a dedicated user base, competitive offerings and overall great product, freemium is a practical, and profitable business model. Zynga fulfills all of these, especially as the crazy addicting part.
In some or fashion, Zynga will offer a subscription service in the future. Relying on scammy advertisements and measly returns on virtual goods cannot last forever. Zynga is simply not profitable enough with their current business model, and we have to hope for the sake of the crops that a subscription based Farmville is done in a smart, flexible way for Zynga to support and grow their already large community.
How do you think the rabid Farmville users will take having to pony up to feed their cattle and plow their corn? Leave your thoughts in the comments.