facebook credits

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The future of Social Games #1

Facebook Credits – Good or Bad?Nimrod Cohen: Director of marketing, Bees and Pollen

The future of Social Games


[email protected]

February 2011

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The evolution of Social Games Monetization

2007 – 2010

Ads & Banners

Different types of virtual currencies

Offer Walls

2011

Facebook Credits!

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Facebook Credits – Good or Bad?Nimrod Cohen: Director of marketing, Bees and PollenWhy its good?

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Market LiquidityWith a single currency the market becomes bigger. Until now paying was made to different games (each with its own currency), making the paying process less attractive for the average user. (Farmville cash is worthless in Happy Aquarium for example…).

“We have no cross-game liquidity now. That means that I’ll spend less liberally, and try to manage my spend to my anticipated purchase.” Peter Relan, CrowdStar’s chairman and founder

Why Facebook credits are GOOD for the Facebook ecosystem?

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ReliabilityFacebook credits is a reliable, powerful and trusted. Facebook invested a lot of time and resources to make a convenient and easy user experience of 'how' to pay. Small developers can now focus on creating better games. In a case of a problem, users have got only one source to deal with.

“The platform is the only stable scaled player who can provide any assurance — currencies are about consumer confidence”


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Mutual DependencyHaving15-20 big game developers is on Facebook's best interest. Despite saying that, small and medium developers are of highly importance for any gaming platform, and Facebook is of no difference (Can you imagine Apple without its small developers?....). This is one of the reasons Facebook helps developer in promoting the Credits.

“With Credits the user’s payment experience becomes universal “


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Increased revenueIn a friction less single currency market not only users pay more but the likelihood of ‘free riders’ to pay for the first time is increasing as well. Although 30% revenue tax is significant indeed, it becomes less painful when the percentage of paying users is significantly growing.

“The pie could be three or four times larger.”


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The Bad!

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Negative market affect:It is clear why Facebook’s 30% tax immediately hurts developers, however they are not alone in this boat. The entire spectrum of payment and monetization companies are now facing a real risk for their existence. Recently Facebook declared a partnership with “Trialpay” as the only offer payments company to works with Facebook credits.Monopoly is never good…

“…here’s a platform that I’m dependent on for distribution as well as monetization — that’s a problem.” Vikas Gupta, CEO and Co-founder at Joobla (Social Gold)

Why Facebook credits are BAD for the Facebook ecosystem?

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Low revenue per game The transition to credits as a universal currency is perhaps the best thing that ever happened to Facebook gamers as they are no longer bound to a single game when paying. The same goes for the big gaming companies who enjoy from a wide range of games across the platform.However, small companies with one or two games will suffer. Especially those with few items on their inventory.

“when a user knows they have money that can be spent across games, they’ll become very cautious about where they spend the money”


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Lost value of moneyAnother parameter that prevents Facebook credits from being the perfect solution for game developers is that in a pre-paid economy (where players have to commit to buying more upfront before they even know on what and how much…) a certain amount of the money will always get lost for in favor of the platform.

“…that will lead to developers never seeing the value even though they created it.”


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30% Tax fee!!!

30% tax is by far the highest amount ever to be taken by an open web platform. In addition, it is still uncertain how would Facebook react to fraud transactions but there is a strong chance that game developers will provide value that eventually

will not be paid for. This can result in 40-50% tax for game developers, before even mentioning advertising costs…..

“If the money came from fraud it never makes it to the game developer.”


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Lack of informationUp until now, game developers could watch and analyze the entire funnel of a user in their game, from the first visit to the first purchase. However, with Facebook credits the funnel gets broken. Game developers will no longer be able to know if a certain player is a heavy spender or not (I know what they spent on my game but not what they spend overall), and whether this type of user is a fraud material or not.

“It’s more effective when developers can see the end-to-end flow of money.”


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Decrease in user’s loyaltyWith the ability to spend credits on each and every game users will be much more cautious before they will spend money on a specific game and will not hesitate to leave a game for a similar one, as their money is acceptable also on the competitors' game. The result is less loyalty and engagement .

“The switching costs with currency, especially, have gone down..”


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ConclusionIt seems that the biggest gainers from the transition to Facebook credits are the players themselves. Big gaming companies were not too affected by this change and can still produce high revenues.

As for small and medium sized companies the feelings are mixed. These developers should optimize the limited tools which are still in their disposal.

Visit www.BeesAndPollen.com to find out more about creative ways to optimize your Facebook game.

For more info:

[email protected]

facebook credits - good or bad? (social games 2011)

Technology

big gaming

facebook credits

facebook ecosystem

nimrod cohen

social games

game developers

small developers