In-App Purchases in iTunes Down, Zynga Among Affected

In-app purchases through the iTunes store have been down since about 6 p.m. yesterday affecting many companies, including social gaming company Zynga, a source close to Zynga tells LAUNCH.

In-app purchases are responsible for more than 72% of all revenue generated by iTunes, according to a report by Distimo. In July 2010, in-app purchases only generated 28% of all iTunes revenue.

Many other companies are having the same problem, which has led to some disabling the in-app purchase function for the time being until the issue is resolved.

The iTunes outage is reportedly related to Apple's inability to securely verify in-app purchases, a problem first reported by Engagdet.  

LAUNCH has contacted Apple to confirm the outage and its cause.

UPDATED: Zynga has declined to comment on this matter. 

It's not clear how Zynga has been affected by the outage, but it appears that users can still make in-app purchase of "Farm Cash" in FarmVille. There is a possibility, however, that users who attempt to make the purchase will be charged but not receive their virtual goods, our source says.

More than 60M users play Zynga games daily and the company boasts more than 232M monthly active users.

Zynga filed for its IPO in July and expects to raise more than $1B from the sale, but has delayed its public offering until at least October because of the fluctuating stock market. The company is reported to be valued between $15B and $20B.

According to the company's S-1 filing on Wednesday, its primary revenue source is the sale of virtual currency that gamers use to buy in-game goods. The game maker experienced a 90% drop in net income from $16.7M on March 31 to $1.3M on June 30, according to the company's amended S-1 statement.   

San Francisco-based Zynga was founded in 2007 by Mark Pincus, Scott Sale and Kyle Stewart. In 2008, the company raised more than $29M from venture firms led by Kleiner Perkins Caufield & Byers.


Twitter: @AppStore

Twitter: @Zynga  

Mark Pincus
Twitter: @markpinc

Kyle Stewart