Mike Isaac

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Facebook Jumps Into the Games Publishing Biz

Facebook_F380Game on.

After years of being a platform for gaming companies to distribute and promote their titles, Facebook on Tuesday unveiled its new mobile games publishing initiative, aiming to back a select handful of gaming outfits to increase distribution across the social network.

Facebook will take a direct, up-front cut of partner gaming company revenue in exchange for a host of resources that only Facebook can provide, including highly targeted advertising to Facebook gamers, analytics tools, and prolonged collaboration with Facebook’s gaming department. In return, Facebook finds itself a new revenue stream — and a potentially lucrative one, if any of these games go viral on the company’s network.

The idea, as I understand it, is to focus on the small- to medium-sized gaming studios, the outfits that would otherwise be drowned out underneath the massive advertising budgets that major gaming studios have, or perhaps lost amid the many, many selections in Google Play and the Apple App Store. (Though, if the program sees success, I’m curious to see how long that self-imposed size restriction will last.)

“With more than 800 million monthly users in our mobile apps and more than 260 million people playing games on Facebook, we are using our unique reach and targeting capabilities to help games in our program find and engage a valuable audience,” the company said in a blog post on Tuesday morning.

Revenue-sharing agreements between Facebook and gaming companies aren’t entirely new, as Facebook, like Apple and Google, takes a standard 30 percent cut of the virtual transactions that occur inside of games appearing on the Facebook platform. But Facebook’s payments business, composed primarily of this 30 percent cut, has long been dwarfed by Facebook’s advertising business, and the company has looked for ways to grow that gaming revenue stream for some time.

With the dissolution of Facebook’s past exclusivity agreements with game giant Zynga, Facebook is freed up to experiment with this new publishing model, and the resulting, possibly larger, revenue stream.

I wrote about a potentially contentious part of the new initiative last week, as Facebook plans to test alternative ways to promote the games across its network. One of those, at the time, included suggesting new mobile games inside your notifications tab, an approach that could tick off Facebook users who don’t want advertisements where they don’t typically expect them.

It’s unclear what other forms of ad experimentation will look like at this point, but I assume they’ll surface as Facebook begins to roll out the initiative more widely.

Facebook contends that any experimentation it does with distributing its partner games will be targeted to existing gamers — in other words, focusing on people who actually want to play games on Facebook.

“This program is designed to reach people who already play games on Facebook with new games that may interest them,” the company said.

And with about a quarter of Facebook’s billion-plus user base playing games, that’s still a large audience seeing these new types of ads.

The effort kicks off Tuesday with about 10 partner studios; Facebook asks any other interested parties to apply on Facebook’s game publishing page.


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