In the early days of the Facebook application platform release, I was seriously underwhelmed by the applications on display. They were, and in many cases continue to be, dumb, spammy and boring. No, I really don’t particularly care if your pigs are running, well hog wild in Farmville. But it’s OK that you do.
In many cases, none of these apps were making a cent. They may have been popular, but where was the money to support them? Just as regular Web sites have had to start diversifying beyond purely ad-based models, apps couldn’t just rely on ads on canvas pages to sustain their development.
With the explosion of virtual goods, application developers are finding new ways to help themselves to a little of your money at a time.
Virtual goods have a long way to go in the United States. They are a mature market in Asia. According to Virtual Goods News, Asia’s total annual virtual goods economy might be worth more than $4 billion, which is about 25 times larger than the market in the United States, currently purportedly valued at $200 million.
Facebook Virtual Goods Games
Take the games from the Chinese developer Reeko for example. (Tagline: “play with friends.”) According to an interview with their CEO Patrick Liu, monetization on Facebook has been higher than on other Reeko platforms. Their game Sunshine Ranch has 1,162,511 active monthly users as of today. You can play Sunshine Ranch for free, or buy coins for a range of $5 to $50 or more using Visa, Paypal, MasterCard or Amex. Coins let you buy carrots, pumpkins, fertilizers and more.
A similar game, Farmville, is at the #2 spot on the hot games list at Inside Facebook. You buy coins to let you plow more fields and, well, do other farmy things.
In fact, the majority of the games on this list are monetized through a free to play virtual goods model. You can play for free, but if you want to really pimp up the game, you need to buy stuff. If you don’t want to buy using real money, you can participate in advertiser-financed offers through companies like Super Rewards and Trial Pay.
Facebook Celebrity Virtual Goods
Lots of news about the Britney Spears gifts now available on her page. She has 2 million fans, and presumably she believes that at least some of them will spend $1 to $2 to send a little itty bitty pic of her to their friends.
Other celebrities, Harry Potter for example, allow you to share branded gifts for free. Hoping of course that it spreads the word about Harry’s latest movie offering.
Getting Real: Real Life Facebook Gifts
Also new, developers can now integrate real gifts into the Facebook Gift Shop, alongside virtual gifts. So you could actually physically arrange to have red roses sent to the one you admire, instead of just an icon. When users select a physical gift, they’ll be asked to enter a delivery address just like a traditional online shopping experience. You can already see Britney Spears gifts on offer, and other branded gifts. I don’t know how much of a slice Facebook gets from these gifts, but it’s all good for them.
The Pay with Facebook Option
Facebook itself wants to get into the stream of money moving around, with their new “Pay with Facebook” option. It remains to be seen whether this new feature will become a ubiquitious method of payment. But regardless of that, virtual goods apparently represent a minority but decent chunk of Facebook’s revenue. Social Media Today provides these (unsubstantiated) estimates:
- $125 million from brand ads
- $150 million from the ad deal with Microsoft
- $75 million from virtual goods
- $200 million from self-service ads
Total: $550 million
To read more about Facebook Virtual Goods, go to that section of the mighty fine Inside Facebook site.