New Facebook Games Dashboard

Back in January Facebook unveiled plans to launch a new games dashboard where "Users will be able to look at their games, see what their friends are playing and see recommended games by the site and publishers." That was not a surprising development given the growth of games on the site.

What is interesting is how Facebook will handle microtransactions for users buying virtual goods that was explained in a recent developer blog. Essentially, users will buy credits to use in games that work across all games. So rather than buy Farmville etc. goods directly from developers, users will pay with Facebook credits bought from Facebook. This virtual currency will be purchased using the same conventional social media buying mechanisms, i.e., credit cards, Paypal or mobile phone billings. Application developers will then received 70 cents of every dollar's worth of goods purchased within their apps.

I don't know what the exchange rate between Facebook credits and dollars will be, but pretend 100 credits costs 1 USD. If I buy a virtual good for 100 credits, the developer will receive 70 cents. Ok, so not rocket science.

Observations:

1) A 70% take is the same rate that iPhone app developers get on sales. I'm curious how Facebook came to their 70% number, though I admit I don't know what kind of take Facebook has been getting all along on app sales. My feeling is that 70% seems like a plausible number if you are happy with how developer payments work on the Apple App store. But Apple and Facebook, are different kinds of companies. Apple characterizes their 30% take of App sales as not a large profit center compared to the rest of its business. Facebook may view its 30% take very differently given the only other real revenue source is advertising.

2) Also mentioned in the developer blog above, Facebook credits will be available in 15 currencies. I'm curious, but will the relative price of those currencies fluctuate with the global currency market? If today $1 US gets me 100 credits, will it be the same price tomorrow if USD suddenly rises hugely against the Euro while simultaneously changing at a different rate against the Yen?

Let's assume once the Facebook Credits price is set in a real currency, it won't change frequently, if at all. Further, assume it stays constant within each of the 15 real currencies. In simpler terms, if a 10 year old kid in the US tells her mom she want $5 worth of Facebook credits for something, and then tomorrow those 500 credits will now cost $6 dollars, I would hope that savvy mom will wrinkle her eyebrow and says "wait a second..."

Going further still, could there be a Facebook type of FOREX market? A virtual currency exchange dealing in actual virtual currencies backed by real currencies...that could make your head spin. I can see it now: "Facebook FOREX for Dummies" ads all over the internet.

The only reason I bring up the multiple currencies point is due to the potential daily volume of sales on Facebook across potentially millions of daily purchasers doing millions of daily transactions. We're not talking about buying/selling of goods on Ebay that require shipping and relatively long processing and travel times. On Facebook it's instant and the boundaries between people in counties are virtually non-existent. Facebook will have to main a kind of firewall between users from different regions that use different currencies who would like to buy in one currency over another depending on the exchange rate. That's wouldn't be hard to do and I can only assume that Facebook is way ahead of me and already prepared to set that up. Again, it's not rocket science. And most people probably don't care too much about trying to find currency arbitrage opportunities via Facebook, much the same way people don't (and can't) on Xbox Live using the increasingly maligned Microsoft Points.

And since Microsoft Point prices don't change often, this table shows the current differences by region based on general exchange rates. Won't these need to change on Facebook since buying credits will probably occur at similar amounts as Microsoft Points.

Finally, what will be the consumer reaction and will it actually increase purchasing? Facebook says it will and also claims it will increase revenues developers net. We'll see.