Liz Gannes

Recent Posts by Liz Gannes

Even as It Makes Credits Mandatory for Games, Facebook Downplays Its Payment Ambitions

On the occasion of Facebook’s preannounced July 1 deadline for game developers to exclusively process payments using Facebook Credits, we paid a visit to the company’s platform and payments executives to find out how things were going.

Facebook will later today announce it is adding support for 32 additional currencies to Credits, including the Brazilian real, the Korean won, the Malaysian ringgit and the Russian ruble. That brings Facebook to 47 currencies supported.

Partnerships and platform marketing VP Dan Rose said he expects that nearly all games will make today’s deadline — though my colleague Tricia Duryee has found a couple of developers who procrastinated until the last minute.

Games that don’t make the transition to Credits will soon be warned that they’re violating the newly updated terms of service and face standard enforcement procedures, Rose said. Meanwhile, Facebook has put out all sorts of incentives and case studies showing that usage of Credits encourages more in-game spending.

But Rose continued to downplay any larger ambitions for Facebook Credits beyond creating a more consistent experience for users to purchase virtual goods within games — even though they’re already being used to buy Facebook Deals and a limited selection of movies.

“Our core business is ads,” Rose said. “We think of credits as a service to users and developers. It secondarily generates revenue for Facebook.”

Rose added that Facebook has far fewer credit cards on file than other companies, though he wouldn’t do the math for me. I mentioned that Apple recently announced it has 225 million credit cards on file.

Rose declined to give an equivalent credit card stat for Facebook, but noted that Facebook has said more than 200 million people play games per month, and of those only a sliver — the industry statistic is probably around five percent — ever spend money.

However, that virtual goods spending in real terms is “significant,” Rose said. “Even though it’s a small percentage of people, it’s a large number.”

OK, but now that people are spending more of their money online, I asked, don’t you see the opportunity to facilitate that at Facebook scale?

“From our perspective, the e-commerce and physical goods space is quite well served,” Rose said. “There’s lots of companies doing that and it’s actually quite hard.”

What about deals?

That’s just a matter of convenience, said Facebook platform marketing manager Deborah Liu. “If a user went to the trouble of buying Credits in a game, we didn’t want to say to them you can’t spend that money you’ve already spent with us.”

Are you guys seriously trying to say that you don’t have a larger vision here?

“Really, there isn’t,” Rose replied. “We’re focused on games, and we’ve enabled some other tests. Obviously there are lots of places this could go, but we think we have a lot of opportunity in front of us.”

Liu and Rose added that Credits has mostly avoided problems like fraud and instability because the its economy doesn’t fluctuate, due to help from larger efforts like Facebook’s “social authentication” system, and because users can’t extract their money from the system.

Liu said the demographics of Credits users are parallel with those of social games — older women in regions where Facebook is most popular.

Asked about extending Credits to be more like real currency so they can be passed between people, cashed out from the system and used on other platforms like iOS, Rose said obtaining the banking credentials to allow such functionality and striking deals with other platforms’ payments systems is “not something we’re focused on.” (Though the paper trail may indicate that some credentialing is going on behind the scenes.)

All this denying of Facebook’s larger ambitions for Credits is likely to have no effect whatsoever on industrywide anticipation of such moves. But at this point in time, on the occasion of this mandatory Credits milestone, that’s the party line.

Please see the disclosure about Facebook in my ethics statement.


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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus