Facebook Credits: Virtual Currency in Social Gaming
Facebook Credits are going to play a major role in Facebook’s monetization strategy as the cross-application virtual currency system comes out of the beta testing phase and becomes the preferred users’ solution for purchasing virtual goods in social media games.
App developers like Crowdstar (Happy Island), Playdom (Mobsters), Playfish (Pet Society, Restaurant City), RockYou (Birthday Cards), 6waves, and Zynga (FarmVille), are perfecting Facebook Credits integration in their apps in exchange for 70% of the revenues from virtual goods sales (Facebook is adopting Apple’s App Store 70-30 revenue split model.)
Alternative payment methods would take less than a 30% cut from developers, but Facebook is determined into developing and marketing a system that would make users’ purchase decisions frictionless and increase conversions for developers.
Facebook Credits exchange rates are updated daily: Non-US currencies are converted into US dollars and then exchanged for Facebook Credits (1 USD =10 credits.) Recently Facebook stroke a deal with PayPal to allow simpler transactions for users willing to purchase virtual currency on Facebook (the option is currently available to a few users.)
The virtual goods market in 2009 was worth $7 billion in China, Korea and Japan alone, the US virtual goods market was estimated at 1$ billion.
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