Millions of people play poker and other games online and one place they do it is on Facebook. The most popular social media site in the world offers everything under the sun, including a vast array of social-gaming applications. One of those games is the very popular Zynga Poker which is now embroiled in legalities due to Agincourt Gaming claiming Zynga has violated their patents and has filed a lawsuit.
Agincourt Gaming, a company that focuses on the social-gaming space and boasts a Facebook game called Pantheon on its website, is seeking a permanent injunction against Zynga as well as unspecified monetary damages. Regarding the suit, Agincourt said it "owns foundational patents that claim priority back to 1996 and cover the processes for credits-based online gaming and a prize redemption system based on the outcome of game play." In the complaint, Agincourt claims that ‘Zynga has seen rapid growth and that the company's games on Facebook had over 270 million monthly active users as of June.’
Zynga Poker on Facebook is available in several languages including English, French, Spanish, Turkish and Italian. The different Zynga Poker apps alone have ‘likes’ totaling close to 3 million, proving how popular even free online poker games are.
But it is not just Zynga Poker in the limelight; Agincourt's lawsuit which was filed in U.S. District Court for the District of Delaware, also claims that FarmVille, Mafia Wars, FishVille CityVille, FrontierVille and other games, violate its patents.
According to Agincourt, "But Zynga's remarkable growth has not been driven by its own ingenuity," they said in the complaint. "Rather it has been widely reported that Zynga's business model is to copy creative ideas and game designs from other game developers and then use its market power to bulldoze the games' originators. Consistent with this reported copycat business strategy, Zynga has also violated Agincourt Gaming's intellectual property rights."
In 2007, Zynga was founded by Mark Pincus and after a loss of $22.1 million on revenue of $19.4 million in 2008, has since become a social-gaming powerhouse. After two rough years, last year Zynga turned a profit of $90.6 million on revenue of $597.4 million. A recent filing by Zynga with the Securities and Exchange Commission put the company's internal valuation at $11 billion.
Although the bulk of the company's success has come from offering several extremely popular games on Facebook, MySpace, Yahoo and soon to launch on Google+, they also offer several of their games including Zynga Poker, FarmVille and Mafia Wars on mobile platforms via Facebook. The ability to play from anywhere has greatly increased their popularity with online gamers around the world, especially poker players looking for an online poker fix since Black Friday.
Speaking of poker players; poker legend Phil Hellmuth was rumored to be in talks with Zynga about a sponsorship deal. Word on the street is that he was hoping to be signed by the gaming company after his UB sponsorship went south. Rumor has it that Phil was loan shopping, banking on a lucrative deal with Zynga as collateral to pay back the loan. Just how Zynga would profit from having The Poker Brat onboard hawking their brand is unknown.
As far as the legal arena; there has been a steady rise in patent litigation over the last few years, sparking controversy among lawmakers who are calling for a revamping of patent laws. In June, Zynga filed suit against Brazilian social-game developer Vostu to protect its intellectual property. In the complaint, Zynga accused Vostu of copyright infringement, saying the company copied Zynga's most popular games.
In their deal with Facebook which is good until 2015, Zynga relies on the social network's virtual currency, Facebook Credits, for all in-game purchases. Facebook also gets 30 percent of all revenue generated by Zynga’s games. The revenue can be huge for both partners since Zynga boasts 60 million daily active users from 166 countries around the world. In Zynga-land, every second there are 38,000 virtual items created in their popular worlds adding up to 2 billion minutes being logged in Zynga's games.
Although their various partnerships are running smoothly now, in their SEC filing Zynga admitted that, "if we are unable to maintain a good relationship with Facebook, our business will suffer."