Posts Tagged ‘paypal’

Facebook gains patent, plans to make microtransactions easier

Monday, March 1st, 2010

Facebook announced late last week that they’ve officially been granted a U.S. patent for their ‘news feed’ technology. This announcement follows just one week after the company announced that they’d partnered with PayPal as a payment provider within the massive social network system. The latter announcement officially puts to bed any rumors about Facebook developing any type of internal microtransactions payment platform that has been a source of speculation for quite some time.

The News Feed patent now shores up Facebook’s main content delivery mechanism to be free from copycats. In the official filing, Facebook’s patent includes, “a method for displaying a news feed in a social network environment.” The documentation goes on to also cite, “new items regarding activities associated with a user of a social network environment and attaching an informational link associated with at least one of the activities, to at least one of the news items, as well as limiting access to the news items to a predetermined set of viewers and assigning an order to the news items.” If any of this sounds remotely familiar, think Twitter, i.e. network activity and attaching informational links, etc. However, when viewed under the microscope, the patent does not use specific wording such as ‘timeline’ (i.e. twitter’s nomenclature). Facebook reps comment only that they are “please with being awarded the patent,” but failed to comment on how the patent may effect how other social networks use a similar method to display user information.

This patent also brings up other related social networking patents. You’ll remember that former U.S. based social network Friendster (now owned by Malaysia’s MOL Global) owns 5 social networking based patents including: “compatibility scoring of users in a social network”, “how people are connected on a social network”, “the process of friends encouraging each other to upload content”, and “ways for users to manage social network friendships.” Obviously, there’s a high cross over in the social networking arena, and Friendster has yet to exercise these patents, but Facebook could very well take a different route, but probably won’t. It’s a score for Facebook to win the patent, but actually enforcing it could prove to be a PR disaster for the company.

On the microtransactions front, Facebook reports that there are now over half a million applications available to it’s users (in comparison, back in November, wired reported that Apple’s iPhone had over 100,000 downloadable apps available). Facebook put it’s ‘credits’ system in to play back in May, but hasn’t really pushed the product. However, with this many apps available, the monetization potential is clearly too big to ignore. Facebook comments that its, “early testing has show that users pay with Facebook Credits are significantly more likely to complete a purchase than the average Facebook user,” in reference to those that pay with an RMT. This data has clearly prompted Facebook to start looking at it’s ‘Credits’ system a bit more seriously, presumably one of the reasons behind the PayPal announcement.

To this end, along with their patent announcement, Facebook has officially announced that it will now make integrating its credits system much easier for application developers. Backing this up, the company also says that they will invest in research to “improve the program and increase conversion and net revenue for developers.”

As with most online application revenue generators (think Apple iTunes store), Facebook wants a cut of the revenue, as they provide the exposure and platform for said applications. Facebook plans on taking a 30 percent cut on all sales, the remaining 70 percent going to apps developers.

 

Facebook shelves in-house microtransactions system

Saturday, January 3rd, 2009

Have a mental look through your microtransaction news archives, and you’ll probably remember Facebook’s J Morgenstern’s call to developers that were interested in working on an in-platform microtransactions/payments solution.  Got that ‘oh yeah’ memory on hand?  Good, because as it stands right now, a memory is all it is and will be.

Morgenstern’s initial offer required developers to sign a tight lipped NDA (non-disclosure agreement), possibly resulting in less than spectacular interest, and coverage/development news around the internet and amounted to nothing more than a mere ripple.  Surprising, as we know more about Zuckerberg’s choice in footwear than what could have been (and still could very well be for the right development team) the biggest news of the year.  At the time of the initial offer, PayPal co-founder Peter Thiel didn’t hesitate and quickly became a primary source of funding, along with pulling up a chair at the Facebook board members table via his Founders Fund.

A highlight of the initial developer call reads:

Transaction-based applications that use virtual currencies or kick users out to PayPal could soon start accepting payments from users directly in their applications.

A Platform payment system could also be a significant revenue generator for Facebook. While Facebook is not making money directly from application use (developers keep 100% of ad sales), developers would be happy to pay a commission for the service.

Sounds reasonable, if not downright right on the money.  Fast forward one year, and it looks like the facebook in-house transaction system might be moving slightly faster that molasses.  Justin Smith of Inside Facebook ran a post on the 29th of December stating:

…one year later, Facebook has not developed the system, and some signs from the company point to the project being on hold altogether while it focuses on other priorities.

Facebook has apparently decided not to get in the middle of third party transactions, leaving merchant solutions to other payment processors. Developers can continue to choose between established providers like Paypal and new entrants like Spare Change and Zong.

When asked directly about the future of a Facebook Platform payments system this afternoon, a Facebook spokesperson said, “We’ve been excited by advertising and payments solutions provided by the market, and we currently do not have anything to share around a Facebook Payments system at this time.”

The very next day, Smith ran in article analyzing why Facebook have deprioritized an in-platform payment solution.  While the article itself is insightful, a read of readers comments (both negative and positive) should be required reading for anyone involved in the microtransaction field.

While this might be a bit of a setback for Facebook itself, I DO know a certain facilitator of microtransactions, particularly in the way of social commerce monetization that already has a tool ready to roll: fatfoogoo.

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New York Games Conference Agrees: Microtransactions are the way to go.

Friday, October 3rd, 2008

While the New York Games Conference came to a close last week, there were a number of great discussions and roundtables that kept us all informed and entertained.  One ‘Debate Club’ discussion that really stood out to me was the “Get a (Virtual) Life! The Challenges and Opportunities for Monetizing Virtual Worlds and MMOGs” talk.

Coming directly from the nygamesconference.com site:

Get a (Virtual) Life!  The Challenges and Opportunities For Monetizing Virtual Worlds and MMOGs
The lines between social networks, virtual worlds and games are blurring – so how do you monetize these new social gaming environments?

This panel will discuss the relative effectiveness of premium subscriptions, sales of music, video and virtual goods and ad supported content. What is working and what isn’t? How are brand marketers and their agencies navigating this new space? How do advertisers measure ROI and the effectiveness of these new and relatively untested campaigns? How do you handle license and rights issues as well payments effectively? This group of panelists will share their experiences with different business models as well as give advice for how to make smart marketing investments in this ever-changing landscape.

Panelists
Craig Sherman, CEO, Gaia Online
Matt Palmer, EVP & GM, Stardoll
Andrew Schneider, President & Co-founder, Live Gamer
Rob Uhrich, Senior Director, Digital Markets, PaymentOne
Sean Kane, Attorney & Consultant, Drakeford & Kane LLC
Jeff Freedman, Dir of Strategy and Bus Dev, Millions of Us / Virtual Greats

Moderator
Eric Goldberg, Managing Director, Crossover Technologies

While the topic is always certain to bring up a whole slew of varying opinions, all parties involved did manage to agree on one thing: microtransactions are the future of gaming.

Some highlights of the talk include an interesting discussion regarding young people and why they are an ideal market for microtransactions.  Games allow this group a freedom of expression and creativity within their own world.  Stardoll was used as an example whereby users can create a MeDoll, an in-game avatar that is based on an actual picture of the user.  These users can design and buy items for their rooms and personal clothing – thereby providing said outlet for individual creativity and expression – at a cost.
How to pay for it all was another interesting bit.  The panel discussed pros and cons of each side of the pre-paid cards vs. paypal argument, including the often tricky question of ‘Users are often under the age of 18’ question.  By being under 18 years of age, users are technically not able to enter a legally binding contract.  That and not too many 14 year olds that I know have a credit card.

While pre-paid cards and paypal were discussed, I think it was actually an over exertion of a very simple question: How do we actually handle and implement microtransactions?  Clearly a paypal method can work, but has tons of room for errors and problems (think fraud chargebacks), and pre-paid cards are good, but don’t allow for what most game publishers are looking for: an instant transaction, while gamers are looking for an instant gratification.  In other words, even if you’ve purchased a pre-paid card, that doesn’t always mean it’s fully loaded and ready to go for that super swanky 2008 NY Jets Brett Favre jersey Tommy from Wisconsin wants to dress is avatar in.

fatfoogoo is the answer to this debate topic.  By integrating a fully functional and real world tested in-game economy, publishers, producers, and operators can simply skip steps 2, 3 and 4, and start implementing their own microtransaction method today, not 9 months from now.

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Nexon’s Min Kim on the North American free-to-play market

Thursday, September 18th, 2008

When Nexon’s Min Kim took to the podium at the AGDC this week, he first asked the audience a rather logical question: “How many of you here are interested in developing a free-to-play title”?  Approximately 70 percent of the willing and able audience raised their hand.  Fair enough, when you want to get into the game, who better to turn to than one of the experts?  Kim took the question a bit further, by asking, “And how many of you have played Maple Story”, a few hands amongst that 70 percent sank.  Kim ventured one further and asked about Kart Rider, and only about 20 percent of the hands stayed in the air.

Kim jovially scolded his audience with, “The first step to developing free to play MMOs is to play the games. People think they know how to make these games, and yet they’ve never played a FTP MMO before. I think it’s really irresponsible.  If you can’t do it, get an intern to do it and tell you what it’s like.”
Talk about a swift kick in the pants as a wakeup call for developers.  And rightly so.  Basic business sense dictates that you’ve got to know a bit about the industry you’re looking to enter, and a thing or two about what your competitors are doing.

Kim continued on into his talk, speaking to the misconception that free-to-plays are sub quality titles in the North American market.  Pulling some fantastic data from his Nexon magic bag, Kim provided audience members with 2005-2007 North American numbers.  The results speak for themselves:

Nexon America Revenues

  • 2005 – Approx. $650,000
  • 2006 – $8.457M – with the addition of paypal as a payment method
  • 2007 – $29.334M – with the addition of Nexon cash cards in major retail stores

While Nexon and many other developers and publishers hail from Korea, Kim sees the future of free-to-play in Western titles.  We’ve seen this happen in other places like China.  The big games now are from Chinese developers. I think the same thing will happen in the West, with Western-developed titles.”
And while most Westerners view free-to-play titles as casual or n00b gamers only, Kim is quick to point out the gross misconception, “We don’t make games for non-gamers. We make games for gamers that are accessible to non-gamers, and that’s a big difference.”

Developers looking to produce a quality free-to-play should be visiting and playing a wide variety of in play free-to-plays.  And not just play, but head to the milk house as well.  “…try out and study all the shops. There are tens of games out there that are free to play. I think if you visit those shops, see those games, I think you’ll take one piece of learning from each one.”

Warning producers of common pitfalls, Kim also points out, “Don’t have all your items and categories pegged out. Make sure you have a fun game, first.” 9 times out of 10 the ideas you’ll have at the beginning will be wrong. The players will tell you what they want to buy.”  Another warning comes via the gaming lifecycle and time-limited play, “It’s not about shareware. Expansions and content are generally free; it’s all about extending the lifecycle so you can continue to sell items, or subscriptions. Do not lock players out of real content.”

Towards the end of his talk, Kim also spoke to the new and incoming gamers, and how to treat them.  He admits that Koreans have not been the best at this procedure, and how he envisions the western markets doing it a bit better.  “This is something Korea hasn’t done well and I think something that North American developers could do a lot better. And that’s carefully building the initial experience of free to play. It’s incredibly important is to protect those new players. Veteran players will spank a new player who just happens to wander in, so make sure they start in a safe place where they won’t just get headshot 15 times.”

While this is certainly not Min Kim’s first public address regarding free-to-plays, and probably won’t be his last, the AGDC audience was a bit warmer to the topic than previously seen.  The question of does free-to-play have a place in the market is dead.  Obviously it does.  With Nexon’s Combat Arms receiving (dare I say it?) recognition and a nod from ‘core gamers’, EA jumping into the pool and id Software bringing a free-to-play offering to market, it’s no longer a question of “should we?”, but rather “how good, and how fast can we make one?”  The day and age of each top tier developer/publisher with a quality free-to-play is rapidly approaching.  How many of these developers have the necessary experience to monetize this title via micro-transactions?  Who better to speak to than fatfoogoo, because There’s Money in Your Game.

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