In reality, Credits caused headaches for international payments due to fluctuating exchange rates. But last night, the sun set on Credits and Facebook completed its transition to local currency payments. It will help developers and Facebook make more money, smooth payments, and solidify Facebook as an international app platform.
The logic behind Credits looked good on paper. If it sounds like a bit of a rigmarole, it was, but there were some benefits. Hell no! Just imagine if that was denominated in real dollars.
If this catches on, Facebook may be forced to become more like a bank and deal with local currency. So Facebook will see incredibly fierce competition as they move closer to real currency transactions. But overall, the fact is that gamers all over the world have already become comfortable with virtual currencies. The world is different now than it was even 5 years ago, so this is the right time for Facebook to be doing this. James Other reasons for virtual credits: 1. Facebook controls the exchange rate: They can decide what a credit is worth And arbitrate as they wish between a Zynga And the user.
Hand out free credits. They would go out of business if these were free dollars. Now why does that remind me of the fed? If they really knew what they were doing they would start with ultra low charges.
The word would be spread and maybe they would potentially have after some development a real success with it. They have done the exact opposite and that could mean:. And they do not have enough patience for a new big market to form around their product before they can profit from it once again. Which is a big fail for making a good business in long term. My impression since they do not comment on their financials as they are privately owned is that what they already have is a relatively big thing.
But with a much smaller or much more volatile profit margin one could hope for from a tech or any bigger company. And they do not have the courage to rebuild their technology.
Instead they lure very smart people to upgrade the existing one with lots of advanced stuff. It can even be seen on how their user interface works, have you ever played with FB messages in depth a bit like a software tester would play with it? It is pretty poorly written and just not finished. And the real big thing is their back-end, which in my impression failed to account for all changes they try or would like to try today.
The way their management thinks can be easily seen from all those privacy problems they have and the way they communicate it and supposedly work on it. Well, users do have a real problem, not them. All in all, my best guess is that someone will lose his money in Facebook company and they will have team up with someone bigger and established. And more competent. These were originally paid for in dollars. The carrot is that with both ease of use and currency trapped in the system and more goods to buy, absolute usage and revenue go up.
The stick is that without Facebook, Zynga, for one, would lose their users and with Facebook support, one of their competitors could be built up to replace them in short order. This is what drives google absolutely nuts. Keep in mind that the profit transfer off Zynga alone, one company is on the order of hundreds of millions of dollars. Credits on the platform are only one revenue stream.
As another example, take a look at a Facebook page for an artist, say Lady Gaga. This is arguably a far more important communication channel for her than her web site. She HAS to have control over her Facebook page. Credits are just a way to monetize the monopoly on the communication channel. It is, in this respect, like its own country, complete with borders.
No one knows how to design social experiences for audiences like this. Facebook understands social experiences and virility arguably better than another other company on earth. And still they have to try things, see what the users do and adapt. But they have been very very clear about their strategy.
Turn what was a private closed system with closed communication to small fixed personal sized audiences to a public open system where everyone shares everything with everyone and privacy is an old notion and they own the ability to resell the users and their communication. At every step, Beacon, News Feed, defaults, instant personalization, they move the default to sharing everything with everyone.
Instant personalization gives sites user data on users that never even identify themselves and no one complains. One that only they can really take advantage of.
Social gaming flourished on Facebook and became a phenomenon embraced by hundreds of millions, because Facebook provided an open platform where developers could create games and share them with Facebook members, and, as a result, the games spread virally as members played online.
Facebook never created a place where members could find non-gaming ways to spend Credits. Without this central location, members had no way to find ways to spend Credits, except for gaming. And with only 25 percent of users playing games, how could the use of Credits ever reach a tipping point?
Obviously the average Facebook member will never see their Credits balance. This model may have been financially acceptable barely to developers of social games who were essentially selling virtual goods with little or no actual cost to provide, but this was an unworkable model for companies with a real cost of goods.
For example, it would have been great to see companies like Netflix or Spotify offer a Facebook subscription where members could watch movies or listen to music for 50 Facebook Credits a month. For more information on the categories of personal information we collect and the purposes we use them for, please view our Notice at Collection. Become a Member Sign In. General Newsletters Got a news tip? Free: Join the VentureBeat Community for access to 3 premium posts and unlimited videos per month.
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