Ronnie05's Blog

Facebook Credits: Gathering Momentum

Posted in Social context, media and advertising by Manas Ganguly on November 15, 2010

Facebook and Apple (notably) have a online payment skirmish lined up next in the scheme of things. At stake for both these companies is the upper hand in crucial ‘points of control’ across the Internet Economy, Online Payments. While I have covered Facebook credits in two of my earlier posts, this post is to profile the continuum in FB Credits program. I would also be featuring Apple’s efforts in mobile based payments in a later post.

Facebook will generate more than $1 billion in sales from virtual goods this year, and approach $2 billion next year. Facebook had introduced Facebook Credits as a enabler of online transactions. Currently, there are more than 200 games and applications from 75 developers that accept Facebook Credits for those virtual goods, including 22 of the 25 most popular social games.Facebook credits can buy virtual goods from more than 200 applications on the Facebook platform, like special crop seeds or enhanced tractors in the otherwise free-to-play social game FarmVille. Credits have now moved into the physical world as well. Recently, Safeway Stores joined Target, Best Buy and Walmart in selling Facebook Credit gift cards, just in time for them to become a stocking stuffer for the onrushing holiday shopping season. Facebook is ramping up its repertoire of services which accept Facebook credits and features the following currently

• Zynga: Farmville
• Electronic Arts: Pet Society, Restaurant City and FIFA Superstars
• Family Tree: Non Game Apps
• Hallmark Social Calendar: Non Game Apps
• Stand up-to Cancer: Charitable organizations
• Nothing but nets: Charitable Organizations

Facebook Credits also have the potential to become a universal online currency that crosses both applications and country borders, not to mention a multibillion-dollar revenue source for Facebook, which takes a 30 percent cut of each transaction. future currency used by publishers of digital content like news and video. Facebook is only taking baby steps. However the potential of Facebook Credits is far from being properly and fully understood. As Facebook Credits increases in usage, Facebook will begin to look and feel like its own economy. FB is slowly expanding its list of developers who can “just plug into Facebook Credits” and not have to worry about creating their own payment system. Social gaming is just the first industry to be affected, but a number of verticals will break through

Airline tickets or other big-ticket purchases may not be practical for Facebook Credits. But news site publishers, for example, could use Facebook Credits to get readers to buy access to an important story or a special video. And music is a very social phenomenon. iTunes has tasted enormous success in the micro-payments space to sell 99-cent songs on iTunes at a time when downloading songs for free was all the rage. Facebook Credits account is charged for the value of a virtual item that in real currency might cost only a few cents each.

As Facebook becomes a bigger part of the user’s shopping and purchasing activities as well as an even greater part of their communications activities, Facebook credits will ascend in number of transactions and acceptance by more and more vendors, publishers, developers and e-commerce platforms.

Virtual Currency: Powering on-line transactions

Posted in Revenues and Monetization, Value added services and applications by Manas Ganguly on September 23, 2010

As discussed about in an earlier blog, when increasing majorities of our lives are going online, and online behavior and habits will increasingly get transactional such as buying goods and products. Due to the global nature of the domain itself, purchasing and buying will be greatly facilitated by a virtual online currency, for procuring virtual goods and services online. Sales of virtual goods are projected to reach $1.6 billion this year in the United States alone, according to an Inside Network report. About half of that will be spent on social games, and the majority of that in Facebook games such as Farmville. Facebook Credits is one of the first virtual online currencies that promises to be a billion dollar business soon in the days to come.

Facebook Credit Gift Cards

Facebook is taking its first steps to becoming a dominant player in the virtual currency space and is expected to face stiff competition from Apple, Google and Paypal. Currently Facebook credits is the “funny” money that is used to pay for things on Facebook from online magazines to Farmville turnips. Going forward this “Funny” money may have serious relevance to a lot more than Facebook fun elements. Right now, most virtual goods are acquired within games, but music, movies, and other forms of content could follow suit, increasing the stakes in the race to reduce the friction affecting in-app transactions. Paying Consumers (Through Virtual currency) for watching online video ads or service registration is another way of transacting “funny money”

Facebook already has a big advantage over those companies: a virtual currency, Facebook Credits, that works across different apps rather than being tied to one specific app or another. The other fact that also provides the edge to Facebook in terms of virtual currency is the way they have migrated their partner game and application publishers: Zynga, Playdom, Playfish, Crowdstar, RockYou to Facebook credits. Zynga, the Farmville creator has already been selling over $1 million-worth of virtual credits per day as early as April. Because of the relationship that Facebook has with publishers, it has been able to have every single major publisher switch to Facebook Credits. This provides enormous traction to the platform in its very early days.

The significant other players who could challenge Facebook on the virtual currency platform are Apple and Google. Apple with its 250K apps and iTunes store already has a platform ready through which it needs to integrate its virtual currency. Apple also has the experience and the competency in terms of real time selling of their virtual goods i.e selling iTunes through payment gateways and pre-paid gift cards. Google hasn’t reported much on the virtual currency but with allies like Google Checkout, YouTube, Google Books; Google also has a very strong base for building a virtual currency framework which would integrate into its online merchandise pretty well.

Emergence of more than 2 virtual currency platforms can create complications for developers. App users and gamers will then have to maintain stockpiles of multiple virtual currencies, one for each platform on which they wish to access the same cloud-based app or game which could be a bit of muddle. However, ignoring/non-participation this platform could be a foolish tactic because as and when the Virtual currency platforms reach critical mass and thresholds, would mean lost opportunities and failing to encash on the opportunity !

The Global Virtual Currency courtesy Facebook

Posted in Social context, media and advertising by Manas Ganguly on July 23, 2010

Profiling Facebook’s attempt at Virtual Global Currency: Unveiling Facebook Credits

Even while Facebook has crossed 500 million mark, it has lacked a consistent mechanism for turning the user/follower legions to dollars. Banner advertising in most cases doesn’t provide a worthwhile return on investment internationally.

With an eye on its revenue engines, Facebook has also declared that it will now roll its Credits programme beyond its Beta confines. The network-wide rollout of the virtual currency application would streamline transactions online and, in effect, pave the path to the world’s first global currency. It’s also going to help Facebook scale one of its last major economic hurdles – monetizing its millions of international users. Now translated into more than 100 languages, Facebook will do more than $1 billion in revenue this year

The potential implications of a virtual global currency are staggering, if not difficult to pin down precisely. Facebook users have already shown a willingness to shell out for virtual goods in online games like FarmVille and Mafia Wars. The software company behind these, Zynga, is expected to make more than $450 million this year, the bulk from virtual purchases. With a Facebook credits program, users both domestic and abroad may soon be purchasing real goods through companies that utilize Facebook Connect. The benefits of One-click purchasing for targeted Facebook ads could be enormous: Advertisers and social marketers might have unprecedented access to real-time data on spending patterns and international purchases. Mobile carriers stand to benefit, too, as international consumers are increasingly more adept at using smartphones for financial transactions. A virtual currency could also be a boon to entrepreneurs in developing nations. Consumers could use credits to purchase directly from artisans in Brazil or Thailand. That may require Facebook to ultimately abandon the dollar as its exchange root, but it certainly presents a unique opportunity for micropayments to blossom.

There’s increasing chatter about Facebook giving Google a run for its money. But in some ways it may also carry the torch once wielded by PayPal, which held a similar vision of a truly global currency.

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