The Road to Facebook Credits: On the Home Stretch With New Payment Options

Facebook is requiring that Credits be the only payment option for social games as of July 1st. We’ve been examining the late stages of the transition process in recent weeks, including the steps that large developers and mid-market developers have taken toward the new payment system. At this point, the great majority of gaming developers on Facebook are already using Credits. It’s a few regional developers who  have had challenges with the integration, which explains some of the latest updates Facebook has been making to payout options around the world. Here’s a closer look at what we see going on.

Regional developers — companies with one or two games popular in a single language region — seem to have had a slower transition than others. We’re aware of massively multiplayer online Facebook games in Asia that currently do not have any kind of implementation. We also recently reviewed restaurant simulation TinierCafe, which hasn’t integrated Facebook Credits, suggesting that even at least a few regional developers with a good foot in the North American or European markets are still monetizing separately. [Update: TinierCafe has recently added Credits as the only payment option, so scratch that one off the list.]

This isn’t surprising. Facebook has intentionally focused its efforts on big markets, big developers and globally popular options first. It began by adding Zynga more than a year ago, then bringing in other large developers before moving farther away from those Silicon Valley, and towards smaller companies.

With most of the platform covered, Facebook is now focusing on these more niche markets. Facebook expanded its PayPal payouts to new countries in May, and in June added 13 new alternate user payment options as well as a way for developers in any country to get direct payments to their bank accounts (except for countries embargoed by the US government, of course).

Another is niche apps. For example, the Facebook Credits team described a situation to ISG in which a developer with a subscription model needed additional technical support to set up integration for a recurring pay period. That model hasn’t been as big in the US, but it has had some success elsewhere in the world.

Lastly, Facebook — which has been busy hiring for its commerce team for many months — seems to still be working through talking to all of the developers on the platform. There are small “dorm room devs” like Munich-based Diviad GmbH, which has fewer than 150,000 monthly active users across all three of its games on Facebook. The Ghost Trappers developer has told us it’s so worried about the impact Facebook 30% cut of all Credits transactions will have on its bottom line that it is switching to running its games on its own site using Facebook Connect and not using Credits, something that Facebook has not taken issue with.

We also recently reviewed a game called CopaSocca where developer Pop Rocket Games said that all European countries experienced a Facebook Credits malfunction that took a while to get fixed. So there has been the occasional hiccup.

Facebook is actively adding alternative payment options for different countries and establishing feedback channels through its developer forums, Operation Developer Love and the newly-launched Facebook+Games Page. The Credits team has also worked with developers who came forward with significant challenges to Facebook Credits implementation to create solutions. With the subscription-based apps, for example, it’s now using a back-end solution to support them, a type of revenue that it could expand on later as more industries explore that model on the site.

Facebook is not currently frowning on games that accept other payments off-Facebook but still use the proceeds of those transactions on in-game currency within the Facebook version of the game — so long as there is price parity between the platforms and no spammy, aggressive attempt by the game to direct players off-Facebook to make payments. This means that a canvas game could, for example, continue to use its cross-platform currency without having to make any major changes to its existing payment options aside from limiting those on its Facebook client to just Facebook Credits come July 1. Larger sites, like Zynga’s, also uses Facebook as the exclusive identity service, but provides other payment options.

So while developers aren’t necessarily thrilled with the idea that Facebook now gets 30% of all in-game transactions, they’re not leaving the platform in droves in protest. Even the smallest of developers appear to prefer having a game on Facebook that makes less money than it used to versus having no game at all. And the story is positive for some developers, who say they’re monetizing better than with alternatives. Facebook says its long-term vision is to make the currency more profitable for third-parties even with the 30% cut, after all. The next big test of the impact will be the month of July when Facebook will audit all apps for integration compliance. Facebook will suspend any non-complying apps it otherwise finds on its platform.

Stay tuned for more coverage of Facebook Credits as we arrive at the July 1 deadline.