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SUNDAY, NOVEMBER 22, 2009
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 ONLINE GAMING 
13

Facebook Sees Big Bucks in Virtual Goods

Social networking site wants a cut of gaming transactions

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(Newser) – Gaming is blowing up on Facebook, and the social networking site hopes to take a cut of the very real revenue generated by virtual interactions. Analysts think credits and other services bought to enhance the likes of “Farmville” and “Mafia Wars” will be trading at a clip of $1 billion a year on the site by 2012. If Facebook Credits become the currency of choice and the company follows PayPal’s rates, it would mean a cut of $55 million, notes Bloomberg.

The viability of online games with “virtual goods and microtransactions” is not lost on Facebook, an exec says. “Two years ago, we never considered it.” And investors see developers working in the field—as opposed to traditional “packaged” console or PC games—as a good bet. “There’s only one deal I regret not doing, and that’s Zynga,” one says of the company behind “Mafia Wars.” “I was afraid the valuation was too high. Man, was that stupid.”

A Facebook user.
A Facebook user.   (AP Photo)
A screenshot from
A screenshot from "Farmville" on Facebook.   (©sabrina.dent)
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These are spur-of-the-moment purchases so if the whole payment system becomes seamless and painless it’s going to be a big driver of growth. - Atul Bagga, ThinkEquity

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13 comments
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DeniseVB
Oct 23, 09 2:37 PM CDT
I'm pretty new to Facebook but have noticed most of my "friends" are living in another world (farmville). Can anyone explain that to me like I'm a 4 year old ? They're PaYing for it???? Reply
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IN RESPONSE:
EileenRocks
Oct 23, 09 3:57 PM CDT
Actually you can do play it for free. But if you have the spare dollars, you can exchange them for in-game dollars to buy in-game stuff. It's just a status symbol, so you can brag to your friends that you're so spiffy in your game. So the player gets to feel like a big shot, and the game developer gets all this money thrown at them. And Facebook wants a cut of that cash. (If I was that investor, I'd beat myself up for passing on Zynga, too... That's like passing on investing in Blizzard... makers of WoW.)
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IN RESPONSE:
Toon
Oct 23, 09 3:58 PM CDT
I'm on farmville and yoville. They are games that can be played for free but to move ahead quickly or to meet certain goals you pay real money. Social network gaming can create social pressure to keep up with the Joneses online. I think its probably worst for parents of teens when all their real life friends spend money on those kinds of games.
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+2
IN RESPONSE:
EileenRocks
Oct 23, 09 3:59 PM CDT
I don't play WoW anymore, but I play Runes of Magic, which is a lot like a Zynga game. It's a free to play Mmorpg, that you can trade real money, for "diamonds" to buy status stuff in game. It's the same deal as Farmville, with better graphics. =)
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lolpie
Oct 23, 09 3:09 PM CDT
People pay for video games. There's your explanation. Reply
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+2

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