Ever since Facebook first rolled out its own virtual currency, developers have wondered if, when, and how the company would start encouraging the use of Credits across its enormous platform.
The answer is becoming clear, and the time is now. Facebook wants developers to start using Credits in a big way as it works to build a system similar to Apple’s iTunes, where users make lots of small purchases with a credit card kept on file.
Developers are taking the cue. CrowdStar, one of the most successful social gaming companies, just announced it will use Credits as its exclusive in-game currency for at least the next five years.
The move by CrowdStar comes as big social gaming companies like Zynga and Playfish adapt to a Facebook that is suddenly less hospitable to social gaming companies. In recent months Facebook has dismantled the notification system for games, stripping them of a crucial channel for viral growth.
Now Facebook is promoting Credits as the preferred payment method for games, a controversial move given that it takes a 30 per cent cut of transactions, compared to the much smaller cut taken by the payment startups that had rushed to fill the void. (Apple, too, takes 30 per cent from app developers.)
What Facebook offers, of course, is the biggest audience in the world. With nearly 500m members, a large chunk of whom are active social gamers, Facebook remains an irresistible platform for game companies.
And CrowdStar, for one, doesn’t feel like a 70/30 split will hurt its margins one bit. Quite the opposite. CrowdStar says it already phased in Credits as its in-game currency in December, and has seen revenue per customer jump almost 50 per cent since then. PopCap, another developer, also told us it was happy with Credits, and Playfish and Zynga are embracing Credits, too.
That’s a big leap in revenue per customer, but it’s not surprising, said CrowdStar chief executive Niren Hiro. Mr Hiro likened Facebook Credits to the payment system in Apple’s iTunes store. Because customers trust Apple with their information, and because it’s a frictionless purchasing experience, users are more likely to make those small, frequent purchases — a recipe for success in social games. “Having a trusted, uniform currency is materially important to the amount users will spend, to our business and the future of social games,” he said.
The absence of choice when it comes to payments is actually a good thing for the platform, Mr Hiro said. “If I had 32 options on how to pay, I might have questions about safety and I might spend less,” he said. “Because your credentials are baked in, you’ll be making payments safely.”
Facebook’s efforts to make Credits safe and reliable got a boost earlier in the year, when it brought in PayPal to provide the infrastructure for Credits. Now, as Facebook approaches 500m users and becomes more confident with the deployment of Credits, it’s anyone’s guess how far this will go. “My hope is that the Facebook user singing up for credits will be buying music, movies, virtual goods and eventually physical goods,” said Mr Hiro.
Buying a new stereo on Facebook may sound like a leap, but even before Credits got the green light, retailers were scrambling to put storefronts on the social network. Clearly, Facebook sensed the potential.
