Virtual Goods Now Funding Most Development on the Facebook Platform

When 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. Causes 24,433,363 Causes
2. FarmVille 24,322,458 Zynga
3. LivingSocial 23,988,733 LivingSocial
4. Movies 20,482,745 Flixster
5. We’re Related 18,131,449
6. Farm Town 16,877,110 Slashkey
7. Mafia Wars 16,508,150 Zynga
8. MindJolt Games 16,461,693 MindJolt
9. How Well Do You Know Me? 15,496,280 Unknown
10. Pet Society 15,480,645 Playfish
11. Texas HoldEm Poker 15,250,897 Zynga
12. MyCalendar 13,722,642 MyCalendar
13. Top Friends 12,574,933 Slide, Inc.
14. YoVille 12,429,508 Zynga
15. Restaurant City 10,084,240 Playfish
16. RockYou Live 10,035,212 RockYou!
17. Music 9,627,515 iLike, inc
18. Zoosk 9,422,442 Zoosk
19. Mobile 9,137,468 Facebook
20. MyCalendar 8,971,005 My Calendar
21. Slide FunSpace 8,546,734 Slide, Inc.
22. Facebook for BlackBerry 8,219,146 Research In Motion
23. Birthday Cards 7,231,752 RockYou!
24. Bejeweled Blitz 6,535,047 Popcap Games
25. FARKLE 6,240,050 Viral, s.r.o.
26. Give Hearts 5,546,407 6 waves
27. Barn Buddy 5,525,258 TheBroth, Inc.
28. YearBook 5,496,727 ClassTop
29. Sorority Life 5,351,975 Playdom
30. Bumper Sticker 5,321,315 LinkedIn
31. Friends For Sale! 4,684,859 Serious Business
32. Pieces of Flair 4,421,843 RockYou!
33. Birthday Calendar 4,397,174 BigDates Solutions
34. Daily Horoscope 4,392,745 6 waves
35. Geo Challenge 4,256,481 Playfish
36. Family Tree 4,035,530 Familybuilder
37. Hug Me 3,763,729 RockYou!
38. Who Has The Biggest Brain? 3,743,587 Playfish
39. Word Challenge 3,539,615 Playfish
40. Biotronic 3,522,093 Metrogames

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.

That 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.

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.

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