Playdom Signs Five-Year Contract With Facebook, Will Exclusively Use Credits

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By Chris Morrison Comment

Following on the heels of Playdom’s acquisition by Disney for $563.2 million, we’ve learned that the social game publisher has sealed a five-year contract stipulating exclusive use of Credits, Facebook’s in-house virtual currency, across all Playdom games.

Although we’ve been covering the gradual acceptance of Credits by the big game developers for several months, this deal has an added significance: with Disney as Playdom’s new owner, Facebook now has the support of a major media company for its virtual economy. Playdom’s contract also means that Facebook is one step closer to unanimous acceptance from its most important social game developers.

Facebook confirmed the deal to us this morning. According to a Facebook spokesperson:

Facebook has entered into a five-year agreement with Playdom for the company to use Facebook Credits as the exclusive way to transact in its games on the Facebook Platform. The agreement will give Playdom’s millions of players an easy, convenient and trusted way to buy virtual goods in popular titles like Social City, Sorority Life, Market Street and Bola.

As part of the relationship, Playdom will receive the same revenue share as other developers on Facebook.

CrowdStar, which is about the same size as Playdom, was the first to use Credits exclusively for a game, and recently signed its own five-year contract with Facebook. We’ve also been told by LOLapps, RockYou and Wooga that they’re on board with Credits, while a number of smaller developers have also switched over, sometimes through Facebook promotions that benefit their games.

At this point, Facebook is only missing exclusive deals with the two biggest developers on the Platform, Zynga and Electronic Arts – although Facebook did sign a five year “strategic relationship” with Zynga two months ago. Both offer Credits as payment options in their games, but Zynga also handles payments itself, while EA has other partners like TrialPay.

From here it should be interesting to see what Facebook’s next move will be. The company has steadfastly refused to make a firm statement on whether or when it plans to make Credits mandatory — in part because of opposition from developers who don’t want to pay Facebook a 30 percent cut, the set rate for any company using the currency, as well as loss of control, breakage, and other issues.

Facebook advocates that Credits will create network and ease-of-use benefits that will cause more people to buy virtual currency; with enough exclusive partners in the virtual economy, Facebook should soon be able to make a convincing case for that bigger and better market.

CrowdStar chairman Peter Relan recently listed all the potential positives of Credits in an interview with us, saying that the market could eventually be five to 10 times larger with a single currency; separately, CrowdStar has claimed that it already sees benefits. In time, other developers may also be willing to cheerlead for the currency.

But for now Credits are still a new idea. There are also features and policies that Facebook has yet to make totally clear, like how it deals with fraud, and whether games utilizing its social graph through Facebook Connect would have to use Credits. For more on the issues, also check our interview with Social Gold co-founder Vikas Gupta detailing the downsides of Credits and our own analysis of the remaining questions around it.

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