As we continue our look at the Facebook Platform payments ecosystem, today we turn our attention to virtual economy payment and analytics platform Twofish. In fact, just this morning Twofish announced the launch of a new product called Twofish EasyElements, an easy to integrate toolkit for managing virtual currencies in social networks and online games.
We spoke with Twofish President Lisa Rutherford about the opportunities she sees and the approach Twofish is bringing to market.
Inside Facebook: When did you see the potential in the virtual goods economy?
Lisa Rutherford: I was skeptical. I had been in venture capital and saw the rise of virtual goods in Asia. Many people said it would translate to the US. That model took off in Asia because Asia needed a new business model. The free to play model works in Asia because Asia needed to find a viable way to address piracy problems. The problem is that the US has business models that are working, for example subscriptions. I had a similar reaction to consumers’, which was: free to play is just another way to extract money from users. Then I realized that if you decouple the economy from monetization, a virtual economy can be a game play feature that enhances the game play experience.
Interesting. How does Twofish decouple the economy from monetization?
Twofish runs a virtual economy for you. We’re a virtual economy data platform. We capture enormous data that no one else does on currency, users, inventory management, etc. in an analytics framework. Using robust, simple tools, you can analyze price, items, macroeconomic flow, what types of users are buying certain items, and other variables enabling you to optimize revenue and the user experience. We’ve never had bad press from the consumer side of things. We didn’t say we could take money out of everything. Our goal is to enable more meaningful types of interactions.
What products do Twofish offer? (Note: This morning, Twofish announced the launch of a new product called EasyElements.)
One component of Twofish’s core platform is a banking layer, which records the full credit and debit history for every single transaction that happens in a game. We keep history on individuals, as well as items. If you buy a gun in an elements-backed game, the gun has its own item account, which details who owned it, what they payed for it, etc.
The Twofish Elements Analytics tool gives you unparalleled access to currency, user, and catalogue data with the flexibility of dating mining and visualization. This robust tool captures data relevant to currency, sales, and user reports, macro flows, market activity, payment types, unit sales, revenue, etc.
Now we’re launching Twofish EasyElements for casual social games that have a need for more lightweight tools. It’s easy to set up EasyElements in a couple hours. The first starter kit is CurrencyStarter. Like Jambool, it helps you get money into the system and your currency set up, but it’s different because you can brand your own currency across platforms, have separate exchange rates in different countries, etc.
EasyElements users can access data in a custom Google Analytics integration:
The CurrencyStarter allows you to turn on, sell, and track virtual currencies:
What challenges might Facebook face in launching its own a virtual currency system?
It’s smart of Facebook to begin testing out its own virtual currency because it was leaving money on the table. The company is secure and well-run, and we’re very much looking forward to plugging in. The challenge is that Facebook has to give something (data) back to developers. And since Facebook opened its Platform to application developers before rolling out its virtual currency system, there may be some ill will. By contrast, Apple has been more strategic with its store in not yet involving third-party developers. When Apple introduces its platform, it will be all fanfare and glory.
What are a couple characteristics of compelling virtual goods?
Branded virtual goods that signify individual knowledge of the giftee are successful. Giving a woman a bottle of perfume doesn’t seem that thoughtful, but if you know she wears Chanel No. 5, that signals a stronger level of communication and intent. It’s a way of saying I was thinking about you in a very personal manner. Another trend is around care-taking and making items consumable. Making dog food disappear, a rose wither, or a litter box fill up with poop has the added effect of making people come back.
In this economy, most start-up companies are hurting. What have you noticed in your own company?
Personally, Twofish hasn’t felt the impact. The economy has accelerated a lot of people toward new business models. A lot of start-up companies need to get revenue fast because there’s no venture capital support or large advertising budgets, so bootstrapping is common.
Earlier you mentioned that the free to play model in Asia and the extent to which it could be applied in the US. In the next wave of innovation, what direction will virtual economies take at a global level?
The free to play model from Asia won’t be exported around the world, but similar concepts will be used. In the Middle East and South Africa, there are places that have large diaspora populations and don’t have solid sovereign economies. This is an opportunity to have an online economy transact value and to build a digital economy far beyond gaming and social networks. From a purely classics standpoint, gaming and social networking are on the cusps of extreme innovation.
We’ll see a true digital economy evolve beyond virtual goods and currencies, and beyond games and social networks – a digital economy that’s localized just by being digital. In 1994, globalization was here and now, and today the world is globalizing more and more. The Web enables globalization, monetization, free trade, and the spread of information and ideas – why shouldn’t economies too?