Another one bites the dust. Playdom has announced that they have signed a 5-year exclusive deal to use Facebook Credits as virtual currency, according to Inside Social Games.
What’s significant about this news is that it is even news itself. When Facebook announced the existence of Facebook Credits last year, it was inevitable that it would become the standard virtual currency for social games.
Facebook Credits is voluntary. But, when the company that controls your distribution suggests that you use their currency, unless you are big yourself, it’s not really a suggestion.
Which does make the string of announcements of big social game companies quasi-significant. In the past year, CrowdStar, RockYou, LOLApps, and Wooga have signed up for long-term exclusive deals to use Facebook Credits as their virtual currency.
You would think that Playdom, a day after their acquisition by Disney, would have waited to make this call. Surely, they could have signed a non-exclusive deal and weighed their options, given the strength of their game brands that can bring to Facebook’s platform.
But even Disney sees the writing on the wall. If you are going to piggyback off of someone’s distribution, you got to play by their rules. In this case, use their currency.
Interestingly, Zynga and Electronic Arts (Playfish), the number one and two social game companies, are the sole holdouts right now for Facebook Credits.
However, both have already signed non-exclusive deals to offer Facebook Credits as an option for virtual currency in their games.
As more big players sign up for Facebook Credits and Facebook Credits becomes the de-facto standard, thereby increasing conversion rates, it will be more difficult for Zynga and EA to hold out. They may not sign exclusive deals with Facebook, but they will use Facebook Credits more. It’s inevitable.
I feel like we are in the middle of watching a film where we know the ending of the movie.
And what will happen to all those virtual currency companies that have done such a great job building viable products and technologies, only to watch Facebook use its monopolistic power to take their business away from them?
They will continue to fight the good fight. Live Gamer announced 3 deals last week including EA. gWallet, Social Gold, Rixty, Offerpal. . . are all going after the non-Facebook market aggressively and launching clever new products that Facebook is too slow to match (yet). Some may be acquired by Facebook’s would-be competitors, such as Google, Yahoo!, or Hi5.
Nonetheless, unless something very radical happens, it’s predestined for Facebook Credits to become the standard virtual currency. It’s a good product, but more importantly, Facebook runs a virtual monopoly in the distribution of social games now.Many are attempting to change these facts on the ground, but this is the current reality.