Friendster. Remember them? While they’re still busy gobbling up the patents, they’ve also managed to remain on the radar. At least in the Southeast Asian market. That’s not to say that Facebook isn’t closing in on their action (in so many more ways than one), with Friendster only edging out Facebook in terms of users in the Phillippines according to ComScore. In neighboring countries Indonesia, Malaysia and Singapore, Facebook has already taken the lead. The increasing interest and involvement in Facebook has naturally carved into Friendster’s last remaining turf. They’ve seen a decline in both visitors to the site, as well as how long these visitors remain on the site. “Friendster has to find new ways to make money but at the same time they have to maintain their market share and have a reason why people would stay with Friendster and not go to Facebook,” says Ben Poole regional head of interaction for media agency, MEC. “They also have to up their engagement levels.”
In order to maintain their foothold, as well as open new revenue streams, Friendster is upping their ante, instituting a virtual goods market, powered by microtransaction purchases. They’re also getting into physical, real-world events such as their recent Pinoy Friendster Day in the Phillippines that included live performances by local bands, speed dating, style make-overs, and fireworks that attracted over 7,000 participants.
Currently generating revenue via advertising and sponsorship deals, the new virtual goods sales will open up new revenue streams for the social network on the decline. Alla Facebook and MySpace, Friendster’s virtual goods system will include and API that will open up development to advertisers, game publishers, and application developers – all of which Friendster will take a cut of purchases made with their proprietary currency, Friendster Coins.
Based on the popularity of prepaid cards in Friendster’s area of influence, “We’re extending that model to work on Friendster,” says Friendster’s global product director Jeff Roberto. “We’re applying it to a variety of products and services that have realized success in other micro-payment ecosystems.”
“Once you establish a virtual economy, it’s just your creativity, or best practices that you can integrate, that limit the type of things you can sell,” points out Benjamin Joffe, CEO of Beijing-based digital specialist +8. “There’s so much you can sell, so many existing proven ideas and so many new ideas to find.”
So while Friendster is still chugging along after missing the boat so many years ago, the only question that can really be asked here is – is history, yet again, repeating itself? In the region where the microtransactions model was born, Friendster is only now getting around to instituting the model? We’ve seen the dramatic increase in revenues generated via social networking virtual goods sales, as well as casual gaming sales, primarily in the Facebook court. Once an industry innovator and leader, is this new virtual goods market just another ‘follow the leader’ for Friendster?
