When Facebook CEO Mark Zuckerberg revealed a plan
last year to introduce a centralized payment system for the social network, dubbed Facebook Credits, many game developers were immediately wary
of the proposal.
That's because Facebook takes a 30 percent cut of developer revenues generated via Facebook Credits. It's arguably more convenient for users, as customers can buy the virtual money with their real cash and spend it across multiple Facebook apps, but developers are worried about the effect on their bottom line.
Last April, Zuckerberg tried to sell the idea to a skeptical developer audience: "You may not believe me when I say this. We are doing it for developers."
This week, Facebook said it would do developers another favor by requiring them to adopt Facebook Credits
beginning July 1. "We're excited to give Facebook users the confidence that when they purchase Facebook Credits or receive them as a gift, they can spend them in any game on Facebook," wrote Facebook marketing manager
Deborah Liu this week.
But, perhaps expectedly, not all developers think mandatory adoption of Facebook Credits, and the 30 percent revenue cut that comes with the system, will be beneficial.
At this week's Inside Social Apps conference in San Francisco, Liu was asked to address concerns from small developers about Facebook Credits. She responded
by saying, "Every single day we know developers get to choose between our platforms and another platform."
She was reportedly met with laughter and jeers from the industry audience.
With 500 million users on Facebook, choosing "another platform" -- even one without a 30 percent revenue share -- just doesn't make financial sense for many developers, as the reaction to Liu's statement seems to show.
With Facebook as the overwhelmingly dominant social network, some game developers now feel stuck between staying with Facebook and its new, mandatory payment system or gambling on another means of delivering their games. Likely, most won't take the gamble.
"Making Facebook Credits mandatory in games on the platform is likely to spook many developers," Kavin Stewart, VP of product and co-founder of 44-person Ravenwood Fair
developer Lolapps told Gamasutra. His company has already adopted Facebook Credits. "It's natural for people to look at the short-term, seemingly obvious 30 percent hit to their bottom line."
But the startup Lolapps, founded in 2008, thinks in the long run that having a universal currency system will pay off. "What these [detractors] are failing to take into account is that less friction in user payment and more brand trust in payments will greatly increase people's desire to spend," he said.
To Stewart, the market isn't anywhere near its potential, and Facebook Credits could blow the lid. "If you look at the Japanese market with its ARPUs of eight to ten times the U.S. market, it's pretty clear that we have a lot of upside in per-user monetization," he said.
"In our experience, our revenues under Facebook Credits have been far stronger than when we were working with other monetization platforms," he added. "As more developers get on board, we expect that our monetization will only become stronger."
Nevertheless, some developers with no experience with Facebook Credits are expectedly "spooked." One game maker on Facebook's developer forum this week stated that his company is "very satisfied" with a French partner used for in-game payments and expressed concern over switching exclusively to Facebook Credits.
"...The revenues are better than with the [Facebook] Credits and they provide payment ways dedicated to the French that you don't provide. I won't be able to work with them anymore? Isn't that a bit dictatorial?"
Forum administrators promptly answered other Facebook Credits-related questions in that particular comment thread
, but for nearly two days seemed to avoid the repeatedly-stated question that implied Facebook was in the same company as Kim Jong-il and Joseph Stalin. Of course, they could have just been busy.
While some developers are still highly skeptical of the idea of Facebook Credits, game makers that come from traditional business models might be thinking, "What's the big deal?"
PopCap, the successful Seattle company behind popular casual titles like Bejeweled
and Plants vs. Zombies
, is adding Facebook to its retail and digital download strategies with Facebook games Bejeweled Blitz
and Zuma Blitz
"In looking at our success with Facebook Credits, we believe the reduced friction and customer benefits generally outweigh the revenue split considerations," said Michael Carpenter, VP of social product operations at PopCap.
"In addition, PopCap Games comes from the traditional video game business and we've been in game distribution for 10 years, so the idea of revenue sharing is not new to us. Our games sell in the App Store of iPhone, on the shelves of major retailers throughout the world, and on all of the major game portals," he added.
"These distribution partners bring a great service to PopCap and are rewarded for this. We see Facebook Credits revenue-sharing in a similar light," said Carpenter.
The bigger names in social network gaming like Zynga (FarmVille
), EA's Playfish (Pet Society
), CrowdStar (Happy Aquarium
) and Digital Chocolate (Millionaire City
) have already switched over and committed to Facebook Credits.
Even without the July requirement, it's quite possible that the biggest social games would've eventually driven the rest of the market towards a heavy reliance on Facebook Credits anyway. Maybe Facebook's summer 2011 deadline is just hurrying along a foregone conclusion.
Eric Hartness, VP of social gaming at Diner Dash
house PlayFirst, said, "We changed Chocolatier
to Facebook Credits last year because we believed it was going to become the ubiquitous currency on Facebook, and that Facebook would invest in Facebook Credits to increase the value for both developers and game players."
Facebook developers who are about to grudgingly accept the change might want to look at the positive side, which may point to a bright future for games on Facebook. Asked if the 30 percent cut of Facebook Credits means the social network is taking gaming revenue more seriously, Lolapps' Stewart replied, "Yes. This is a good thing for the community because it puts game developer interests in much clearer alignment with Facebook's. It's a strong statement on their part that they care about making games huge on Facebook."