Facebook and CrowdStar Sign Five Year Deal to Make Credits the Exclusive Virtual Currency

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By Eric Eldon Comment

Social game developer CrowdStar is cementing its existing status as the lead test partner for Credits, Facebook’s virtual currency. The two companies have signed a deal where the developer will exclusively use Credits as the paid virtual currency in all of its games for the next five years. It has already been using Credits exclusively since this past December, and claims that its average revenue per user (ARPU) has gone up by almost 50% as a result.

CrowdStar has been in a good position to try out Credits, because it gained most of its users last fall; developers that got established earlier have tended to invest more money in their own monetization services. Many are concerned about the cost of Credits, including the 30% fee that Facebook takes out of all purchases of the currency as well as the loss of control and breakage. By starting fresh, CrowdStar has less to lose even as it sees what it can gain.

Facebook is testing many different ways of making Credits valuable to developers, like a broad variety of payment methods, Facebook’s brand, high-quality offers, purchase volume discounts and free advertising. The announcement today is intended to highlight how it is making “liquidity” happen — the more users who have Credits to spend, the more sense it will make for developers to plug in to it, just like businesses gravitate towards broadly available fiat currencies, such as the dollar or Euro.

While CrowdStar could be seeing the benefits of Credits from other factors, like improved interface design, its relationship with Facebook does look beneficial to the company. It’s not just seeing higher revenue, it is seeing new growth — Facebook heavily promoted its Hello City simulation game this past month, for example, and that probably helped it grow quickly to nearly 5 million monthly active users, according to AppData. Other developers are being enticed to make Credits the exclusive paid currency in their games, and we expect more announcements on that front in the future.

A big question remains: How might Facebook require Credits? Whether or not is allows non-Credits payment options, like PayPal or third-party offers, is not clear. Not making Credits the mandatory way to put money into the virtual economy of a game means less liquidity; by having other payment options, developers also don’t have to pay Facebook a 30% cut, and instead pay out far smaller revenue shares directly to payment offer providers. Facebook tells us now, as it has in recent months, that it has not made plans one way or another. Here’s the company’s statement, when we asked for more details on how developers can implement the currency:

Facebook Credits give people an easy to use and trusted way to buy and spend virtual currency inside applications, such as games. We believe Facebook Credits are a great way for application developers to handle transactions within their games and we are testing many different ways for developers to integrate Credits. We have no plans to require developers to use Credits as their exclusive in-game currency. Some developers today are choosing Facebook Credits for transactions within their games, while others are supporting Credits as a way to purchase their own in-game currencies.