[This article was previously posted on Inside Facebook.]
Following CrowdStar, Zynga, Playdom, RockYou and most other social game developers on Facebook, EA’s Playfish has announced that it is entering into a five-year agreement to use Credits as the exclusive virtual currency payment option on Facebook. It was only a matter of time.
While many developers had directly integrated with third-party payment options like PayPal, mobile payment options, offers, and more during the early years of the platform, that began to change last year. The developer community began to whisper that Facebook was going to make then use Credits exclusively, and over the course of the first part of this year, Facebook began to talk publicly about doing so.
Playfish has been testing Credits for months, and given the string of other “five year strategic partnerships” that Facebook and social gaming companies have announced, most in the industry assumed it would be doing the same.
EA is getting the same deal as everyone else, in that Facebook will take a 30% cut of Credits revenue and share the other 70%, according to Facebook.
Some developers, especially larger ones that had already built their own payment infrastructures, were not happy about the switch. But Facebook’s intention is not just to make money from the booming virtual goods economy that has emerged on its platform, but to improve the payments user experience and increase the volume of payments for everyone. One view is that it needed to make everyone use Credits in order to have the virtual currency get traction.
Facebook itself has also invested heavily in making this happen, building out its payments team, greatly increasing the number of payment options, and iterating on payments interface flows.
So, now that so many developers have signed on, Credits should be starting to generate higher revenues — and, if everything goes according to plan, the entire ecosystem could see revenue increases as more users spend more money.
To dig deeper on the social gaming landscape, including Credits and monetization dynamics on the Facebook Platform, check out our new report – Inside Virtual Goods: The Future of Social Gaming 2011.