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As the social gaming space evolves and networks like Facebook begin to take the reins as true gaming platform-holders, what could it mean for virtual currency, and for the firms that sprung up in the big rush?
[As the social gaming space evolves and networks like Facebook begin to take the reins as true gaming platform-holders, what could it mean for virtual currency, and for the firms that sprung up in the big rush?] One major driver in huge rush to social network gaming was the tremendous opportunity in microtransactions revenue from the sale of virtual goods. But now that massive networks like Facebook are becoming platform-holders unto themselves -- and implementing their own universal credits system -- it seems the landscape could be evolving again. Now, social network game developers find themselves faced with some of the same issues traditional ones do: paying royalties to platform-holders. With the rollout of Facebook Credits, currently in testing, the social network is trying to make its universal currency a default choice from a trusted brand -- albeit with Facebook then taking a 30 percent cut of revenues. This is a win for users, of course, who are effectively getting to consolidate their virtual wallets and won't have to worry about more than one type of currency. But it's a little trickier for companies who've built their entire business model on things staying exactly the way they are, and collecting money either directly (with smaller PayPal fees) or with virtual currency fees from third-parties that were significantly less than the 30 percent cut Facebook offers. Tensions simmered recently between Facebook and Zynga over the issue -- the two companies' relationship was already a bit troubled after Facebook disabled some of the aggressive notifications that Zynga used to force its games viral. Zynga was able to cut a five-year deal with its platform-holder on virtual currency. And now, it will presumably be able still to collect revenues directly from consumers who play its games on Yahoo, thanks to another new deal which likely includes some profit-sharing. It's assumed that other companies will have to find their own ideal ways of working with platform-holders like Facebook. Zynga's chief rivals, Playfish and Playdom, declined to comment on the recent moves in the space. But what about companies that exist entirely to serve virtual currency to games? If platform-universal currency systems become the norm, virtual currency and monetization firms might find their business challenged. Offerpal, one of the more familiar firms working in this space, says a prevalent universal credits system on a site like Facebook will actually benefit companies who create virtual currency. "If Facebook Credits is successful, then it will lead to more users spending more money in more games, and that is a good thing for all companies powering the virtual goods market," says Offerpal CEO George Garrick. For now, he says, Offerpal will continue to offer its platform-agnostic GamePoints virtual currency, which it says is showing "tremendous initial success" on Facebook as well as other platforms and browser game sites. "Our strategy doesn’t hinge on any one single platform," Garrick says. But with Facebook by far the weightiest single social gaming platform, changes on Facebook will affect -- and challenge -- all the companies that sprung up in a tidal wave of excitement about social play and virtual currency.
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