Recent reports are that the company that built its fortune putting games on the Facebook platform, Zynga, is moving to lay the groundwork to move away from its dependence on that platform. Zynga is supposedly working to launch Zynga Live, a web-based platform that doesn’t require complete dependence on Facebook.
Word is that Facebook and Zynga are on the outs, as Facebook is trying to monetize its own platform. As I wrote in a prior post, betting a business on the ability to access or leverage another company’s business carries risk. Just how much risk is going to vary by the situation but the principals of any business that is dependent on another business must be cognizant of the risk factors, and should re-evaluate regularly.
If a company can execute crisply and take advantage of an opportunity built on another company’s platform, and is confident that the short term ROI is sufficient to go forward, then there is nothing wrong with building such a business. The problem I see comes when the time frame for sufficient return on investment extends too far out into the future. The longer a business is dependent on another’s, the higher the risk that a change in the relationship could bring the dependent business to an end before it gets the required return.
My take-away is that one must craft a solid plan that reflects an understanding of investment and expected returns, and that supports effective implementation. Dithering will only decrease the likelihood of success.
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