Facebook Credits – Game Over, They Win

The micro-transaction economy is just beginning.  In the last two years we’ve gone from “no one is going to pay a dollar for a tiny digital image” to “Holy shit! People are paying $10 for a picture frame in a digital dollhouse!”
New companies popped up like poppy plants in Afghanistan to handle the torrent of transactions.  Facebook, completely caught off guard  by the fact that it had become the defacto gaming platform for the 2010’s (by the way what the hell do we call these era’s) didn’t have any means of making any green off these huge games that we’re sprouting like weeds on Facebooks blue and white lawn. 
About a year ago Facebook announced it would get into the transaction game with Facebook Credits.  Oh’s and ah’s could be heard as dreams of a new PayPal for the 21st century cropped up in many a eCommerce sites minds eye.  There was a catch….Facebook wanted and still wants a big piece of the action – 30% of every dollar.  Excitement was tempered by the golden gaming gooses of Playfish and Zynga.  Their thoughts? We’re making money NOW and you clowns didn’t even see it coming, now you want a 30% cut? Not so fast my friend!
All through this year however, Facebook has slowly but surely stamping out decension.  First, it inked a deal with CrowdStar, makers of the Happy series of games (Pets and Aquarium), to be the exclusive provider of microtransaction currency.  Ok, no big deal – CrowdStar was the new upstart stomping the Facebook game charts… Slowly but surely picked up momentum with smaller developers becoming part of the FB credits beta program.
And then this spring came the show down with Zynga.  With Zynga being by far the largest of the Facebook game companies with revenues rumored to be close to 1 billion dollars threatening to pull its games off of Facebook, Facebook and Zynga were panicked. Facebook worried that perhaps its fledging new age of currency would be dead on arrival and Zynga perhaps losing the most dynamic distribution channel in 20 years. Cooler heads prevailing – Facebook struck a five year deal with Zynga.  Sadly the terms of the deal are unknown – but is likely that Facebook is either getting a smaller cut of the FB credit pie for Zynga games or there is some sort of advertising give back to Zynga (Zynga is or was the largest advertiser on Facebook)
With Zynga in the fold, Playdom signed on for a five year exclusive with smaller but important developer Wooga getting locked up last week.
These moves have locked Facebook Credits into the gaming platform on Facebook.  The largest and third and fourth largest game companies on Facebook are now using Facebook Credits.  New players like Social Gold and PlaySpan do not stand a chance in this ecosystem. With the certainty in gaming secure you can expect Facebook Credits to expand outside of Facebook.  As we see in many areas online – it’s winner take all. Google is search, Facebook is social networks and Apple is online music.  Once the tide turns it can be very hard to change it.  
I believe in a couple of years Facebook Credits may become the defacto online currency of the web. That is of course until something else comes along.

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By Laurent Courtines

I'm here and I am ready to go. Been doing my homework and I have things to say.

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