New details came out today for the much anticipated Facebook Credits update at the f8 developers conference. This virtual currency will be used on free-to-play games to acquire certain virtual goods with real money.
Facebook Credits manager Deb Liu said that there are over 10,000 game apps on Facebook, and 200 million users who play a Facebook game at least once a month. This results in roughly 800 million game sessions a month.
“You may not believe me when I say this,” said Mark Zuckerberg, CEO of Facebook [thanks VentureBeat]. “We are doing it for developers. But it’s not a revenue opportunity anytime soon. Ads are a very good business. With credits, it becomes easier for people to buy things across apps. Rather than being locked into one app that has their credit card, they can buy in any app. This is a canonical economics example where it makes sense to have a standard and have just one, or a few, and that ends up being better for everyone. There is a lot of overhead for us doing this ourselves. It’s a lot of hard work. We don’t expect it to be profitable for a period of time.”
Some developers were clearly put off by the 30 percent fee that Facebook will extract from all transaction for their “credits.” Still, many developers are trying it out as at least a supplement to their own particular game currencies.
“We built this with the user in mind,” Liu said. “The mental hurdle of moving to pay for something is high. You take out your credit card, enter the information, and then buy something in FarmVille. The next day, you play another game. If you want to buy something, you do all of that again. Imagine Facebook Credits as more like a euro, which makes it easy to spend money across countries.”
Liu hopes that this system will as much as triple the number of users willing to use virtual currency and contends it is more secure because it will make it easier for Facebook to universally track.
4 Comments
April 22, 2010
This sounds like a nice add-on feature that should result in more spending on virtual items, at least for games that aren't market leaders. The real question is this: will Facebook eventually require games on Facebook to only use Facebook Credits? If they try to enforce such a thing, what will social gaming companies do? I expect there are some interesting discussions going on behind the scenes.
April 22, 2010
That's a good question, Steve. I think there's going to be some real money in this venture, and eventually the pull between wanting to make more revenue off of this for Facebook and the push by developers who want to keep more money for themselves.
April 22, 2010
Companies with Facebook games really don't have much choice, as MySpace continues to shrink. So if Facebook comes to them and says "We'll take 30% of your game revenue, thank you very much", what can the game company really say? "We'll just take our game elsewhere?" Not when your user base is all connecting through Facebook. And if Facebook succeeds in that, what's to keep them from saying a month later "You know, we thought about it and we'd really like 40% of the revenue."?
It's kind of scary to be so dependent on a platform. Social gaming companies should be looking for ways to reduce their risk, though it won't be easy.
April 23, 2010
Right now, many of these companies have virtual money of their own that I'm sure they'd like to have players use - they'll continue to have those credits for now. It's a delicate balance Facebook is walking, because they have to realize with a free service on the web, if they upset enough people, they'll go elsewhere. It happened to MySpace and Friendster before that, so there's no reason something like that couldn't happen to Facebook if they screw things up badly enough.