One of the few bright spots in Facebook’s last quarterly report was a modest increase in how much money the company makes from payments (as opposed to the company’s primary source of revenue, advertising). Payments were up about 15% from a year ago, mostly due to Facebook Credits purchased to play games on Facebook.
Historically, Zynga has represented the bulk of that revenue. You would expect that, as Zynga’s fortunes have declined, Facebook would see a corresponding hit in games revenue. But that hasn’t happened, notes entrepreneur and part-time Facebook analyst Jon Milani, who dug into Facebook’s latest quarterly report. When comparing Facebook’s latest quarter to a year ago, he discovered that, “Despite a 37% decline in bookings from Zynga, Facebook’s largest games developer, the company still enjoyed a 60% increase in games-related payments volumes.”
Games make up the bulk of Facebook’s payment revenues, which include Promoted Posts and Gifts. Geographically, the majority of that revenue is still coming from North America.
On average, Facebook made $0.65 per person on Facebook in games revenue in North America, and only $0.03 per person in Asia.
Facebook’s ability to make money without games giant Zynga suggests that the company is succeeding at broadening the pool of game developers who are making money on Facebook. Facebook’s games may also be reaching a broader pool of customers (not just Zynga’s Farmville zealots). That’s a stark change from October of 2012, when Zynga’s decline caused Facebook’s payments revenue to fall short of analysts’ estimates by 15%, or $30 million. Indeed, Facebook recently announced that the number of people playing games on Facebook was up 24% from a year ago to 250 million people, which represents nearly a quarter of the site’s 1.1 billion users.