If you want to buy a virtual cow on Facebook, you have to use virtual money. Seems like a fair trade, doesn’t it? Except for the fact that you have to use real money to buy the virtual money to buy the virtual cow and then that virtual payment has to be converted back to real money to pay the developer who sold you the cow inside of his game.
This is why the concept of Facebook credits – particularly Facebook gift cards has always confused me. Apparently, I’m not alone.
Facebook is doing away with the credit system. They are giving game developers until September 12 of this year to convert their systems over to local currency.
On the surface, it seems like a good move, but let’s think about the psychology behind credits. Once you’ve bought them, credits don’t feel like real money, so you’re more likely to spend them on game boosts without giving it much thought. I’d also bet that people buy more credits than they use. Maybe grandma plunked down $50 for a Facebook gift card for junior’s stocking but junior would rather play on X-Box. That’s money in Facebook’s pocket free and clear.
And like all gift cards, there’s always that tiny remaining balance that is too small to use in game so it goes to waste.
By converting to local currency, those overages go away. The payment is still virtual – you’re pushing button rather than handing over cash – but agreeing to a charge of $2.00 is psychologically different than a charge of 200 FB credits.
To battle this, Facebook is recommending that developers create their own in-game currency. This will allow them to easily regulate the game economy by simply raising the cost of buying gems, power-ups, energy or whatever they want to call it.
Facebook also recommends international pricing and a mobile specific store. (Details here)
I wonder what it’s going to cost game developers to make the switch? Some games come from small shops who are barely keeping up with demand. Now they have to go back and make, what has to be, some drastic changes to games that are live.
The effort should be worth it though because Facebook says their game developers split more than $2 billion in revenue last year.
Unfortunately, break-out king Zynga saw a decline in their sales and as a result, they’re cutting 520 jobs and closing some of their offices. Zynga revolutionized Facebook gaming with FarmVille but they haven’t done much to advance online gaming since that time. Faced with more competition and an emphasis on mobile, Zynga has to regroup and fast if they want to stay in business, let alone rise to the top of the heap again.
If you’re a game developer, I’d like to know what you think about the end of Facebook credits. Let me know in the comments below.