Offerpal Forced Into Layoffs After Being Overlooked By Facebook Credits

When Facebook recently chose TrialPay as their offer provider for Facebook Credits, they also chose to overlook other possible offer providers like Offerpal and Super Rewards.  Decisions like that have big consequences for companies like Offerpal that derive a majority of their income from Facebook games that use or are switching to Facebook credits, and the hammer has come down at Offerpal as they today announced a series of layoffs directly affected by the Facebook decision.

The story was broken by TechCrunch, as the CEO wrote an open letter that described the problems that precipitated the layoffs.  Specifically, Offerpal cannot continue to drive traffic to Facebook applications that use Facebook Credits powered by TrialPay, as that’s not a good revenue stream.  They will continue to support games that don’t use credits and clearly indicate that they will attempt to make the transition easy for any of their games that do want to use Facebook credits.

It’s a pretty awkward situation to be in, surely, if you’re a game developer that is with Offerpal and want to cash in on the lucrative nature of Facebook Credits.  Offerpal will likely be explaining how their offers will provide superior value than the Facebook Credits alternative, which will certainly put their developers in a potentially tight spot.  That said, Offerpal will likely act as they have in the past and produce strong alternatives in the Facebook space, and beyond.  We could see Offerpal’s Mihir Shah hint at this in our video interview with him at this year’s Social Developer Summit.  Take a look at the letter from Offerpal CEO George Garrick below.

As most of you probably know, Facebook has launched Facebook Credits, and certain Facebook games and applications have or will transition from their proprietary currencies to FB Credits.

Facebook has indicated to us that at least initially they have selected another provider to be their alt-pay partner for purchases of Facebook Credits. We respect this decision, maintain a good working relationship with Facebook, and will do our best to facilitate the smoothest possible transition for those games which move to the Credits system. However, this means that for the applications we currently serve which do switch to Credits, once that change happens the user traffic to those games that originates from Facebook will no longer be served by Offerpal.

We will continue to fully support Facebook applications which do not switch to Credits, we will as I mentioned do our best to ensure the smoothest possible transition for those applications which do switch, and we will continue to serve our valued developer partners on other Internet platforms and destination sites as well as on mobile platforms.

But like any good business, we must balance our costs with our revenues by business area. This means that we must downsize our Facebook operations in order to adjust to an anticipated lower scale of Facebook user traffic, while we also re-focus our resources on our growth areas including other gaming platforms, open web gaming, new Internet verticals, and most importantly mobile through our Tapjoy subsidiary.

Unfortunately, as a result of this, some of the outstanding people who have worked tirelessly over the last couple of years to monetize Facebook games will have their positions at Offerpal eliminated. I thank them for their dedication, effort and contribution, and will do whatever I can to help them find exciting new career opportunities.

Meanwhile, Offerpal is currently the largest offers and alt-pay provider world-wide. Offerpal’s business continues to grow and expand in numerous other areas including an exciting new agreement with Yahoo!, and on the mobile iPhone, iPad and Android platforms, with more to come. We are projecting continued strong growth going forward as well as sustained profitability.