Virtual Goods Now Funding Most Development on the Facebook Platform

virtual-goods-facebook-3When we look back in a few years, 2009 will be remembered as the year virtual goods-based businesses exploded on the Facebook Platform.

Whereas 2007 will be remembered as the “wild west” for Facebook’s powerful application viral channels, and 2008 was the year that Facebook stabilized the Platform for long term growth, 2009 has clearly become the year in which sustainable virtual goods-based business models have been developed and are beginning to be scaled.

Let’s quickly glance at the top 40 applications on the Facebook Platform by total reach. While these aren’t necessarily the highest monetizing applications on the Platform, the list shows which types of applications are most popular now a full two years since the Platform launched:

Facebook Application Leaderboard

Source: AppData

Name MAU↓ Developer
1.Causes24,433,363Causes
2.FarmVille24,322,458Zynga
3.LivingSocial23,988,733LivingSocial
4.Movies20,482,745Flixster
5.We’re Related18,131,449FamilyLink.com
6.Farm Town16,877,110Slashkey
7.Mafia Wars16,508,150Zynga
8.MindJolt Games16,461,693MindJolt
9.How Well Do You Know Me?15,496,280Unknown
10.Pet Society15,480,645Playfish
11.Texas HoldEm Poker15,250,897Zynga
12.MyCalendar13,722,642MyCalendar
13.Top Friends12,574,933Slide, Inc.
14.YoVille12,429,508Zynga
15.Restaurant City10,084,240Playfish
16.RockYou Live10,035,212RockYou!
17.Music9,627,515iLike, inc
18.Zoosk9,422,442Zoosk
19.Mobile9,137,468Facebook
20.MyCalendar8,971,005My Calendar
21.Slide FunSpace8,546,734Slide, Inc.
22.Facebook for BlackBerry8,219,146Research In Motion
23.Birthday Cards7,231,752RockYou!
24.Bejeweled Blitz6,535,047Popcap Games
25.FARKLE6,240,050Viral, s.r.o.
26.Give Hearts5,546,4076 waves
27.Barn Buddy5,525,258TheBroth, Inc.
28.YearBook5,496,727ClassTop
29.Sorority Life5,351,975Playdom
30.Bumper Sticker5,321,315LinkedIn
31.Friends For Sale!4,684,859Serious Business
32.Pieces of Flair4,421,843RockYou!
33.Birthday Calendar4,397,174BigDates Solutions
34.Daily Horoscope4,392,7456 waves
35.Geo Challenge4,256,481Playfish
36.Family Tree4,035,530Familybuilder
37.Hug Me3,763,729RockYou!
38.Who Has The Biggest Brain?3,743,587Playfish
39.Word Challenge3,539,615Playfish
40.Biotronic3,522,093Metrogames

The majority of these apps and games are monetizing through a free to play virtual goods model. To sum up, here’s how it works: players interested in purchasing virtual items in the app (like functional items to help them complete a quest, decorative items to help them dress up their avatar, or time saving items to help them progress more quickly) must do so with that application’s virtual currency.

virtual-goods-facebookThat virtual currency can either be earned through in-application achievements, or purchased directly or indirectly through a variety of methods. Users can buy virtual currency with real currency using direct payment methods like PayPal, Amazon, SocialGold, or Google, mobile payment methods like Zong, Allopass, or Boku, stored value cards sold at retail like the Ultimate Game Card, or through an intermediary (“universal”) virtual currency like Facebook Credits or Spare Change – amongst others.

Users who don’t want to fork over cash directly can participate in advertiser-financed offers and surveys managed by firms like Super Rewards, Offerpal Media, Peanut Labs, AdParlor, Gambit, Sometrics, TrialPay, and others. In these cases, the advertiser pays the developer when players sign up for subscriptions or participate in other CPA campaigns, and the player is then credited with the in-game currency.

virtual-goods-facebook-2

Of course, free to play virtual goods-based business have been thriving internationally for years – one recent estimate pinned total virtual goods revenues in Asia at $5 billion last year, 25x the US estimate of $200 million for 2008. But the market is really gaining steam in the US this year. Just last week, Piper Jaffray released numbers estimating that total virtual goods sales in the US will reach $600 million in 2009, but we believe those numbers are low.