Last week at our Inside Social Apps conference, Facebook Credits lead Deb Liu told the audience that Facebook is planning to introduce more and more payment options for specific markets around the world. The goal is to help users more easily buy Credits through the payment options they’re familiar with.
A great example of that actually launched last week, although the news was only picked up in local press.
Soft-World International, a developer and distributor of massively multiplayer online games and related products in Taiwan and mainland China, is introducing a version of its MyCard pre-paid cards for Facebook Credits as part of what it’s calling a strategic relationship between the two companies.
The cards are available in Hong Kong, Taiwan and Macau now — Chinese-speaking areas that, unlike mainland China, do not block Facebook. The point is to help convert the millions of avid social gamers in the region to paying customers. Soft-World is clearly making the most of the deal, blanketing its landing page with more information about it.
The economically strong market has been getting bigger and bigger for Facebook, despite the ban on the mainland. The latest data from our Inside Facebook Gold report shows 11.8 million monthly active Facebook users in Taiwan as of February 1, 3.70 million in Hong Kong and 187,000 in Macau. Nearly all of the Taiwan and Macau users, and two-thirds of the Hong Kong users are using Facebook in Chinese — around 14 million of the 18.3 million Chinese-language Facebook users in the world.
Anecdotal reports from developers over the past year or two suggest that social games have been driving Facebook adoption. The increasing prevalence of social games in Chinese, including a heavily localized version of FarmVille from Zynga, indicates the success developers have been having from monetizing these users.
Facebook’s entrance is no surprise. A report from Taiwan-based technology publication DigiTimes about the Soft-World deal reveals more about the market.
In addition to Facebook, Soft-World has already cooperated with several operators of social network games at Facebook, such as 6Waves and Playfish, to provide pre-payment services, bringing in average revenues of NT$150 million (US$4.6 million) a month in 2010, according to industry sources in Taiwan.
In other words, that’s money that hasn’t previously gone through Credits, that now is going to — Facebook will be getting its 30% cut, and hoping that it can further grow revenue for developers on top of that.
Based on the operation of Facebook games in the Taiwan, Hong Kong and Macao markets, Soft-World will generate revenues of an estimated NT$3 billion a year from MyCard Facebook, the sources indicated. However, Soft-World would have a gross margin of as low as 2-3%, the sources said, adding this shows that the deal will not bring substantial profits for Soft-World but may afford many business opportunities derived from the large Facebook user base.
That’s around $35 million a year if the sources’ estimates prove correct. The gross margin for Soft-World is likely similar to what most other payment providers get through Credits — not that much, but also around the typical amount that payment providers get in a competitive market, anyway.
For more on Credits expansion, check out our video of Deb’s panel, here. The Credits discussion starts at minute 14:15.