Google is the 800 pound gorilla of the internet, but despite its prominence, it doesn't have a large footprint in some of the internet's most lucrative emerging markets, such as online gaming. But it might be looking to change that.
On Saturday, TechCrunch's Michael Arrington reported that Google has "secretly invested" $100m to $200m in Zynga, the maker of some of the internet's most popular social games, including Farmville and Mafia Wars. According to Arrington, the investment is related to a new product Google is creating with Zynga's help: Google Games.
Social gaming is the driving force behind the billion-dollar virtual currency market. Popular social games on Facebook such as Farmville and Mafia Wars have turned startups like Zynga into IPO candidates, and have led to an ecosystem of companies that have come up with alternative ways for consumers to pay for digital goods online.
But for social game developers, building social games that have staying popular looks like it may be a challenge. As reported by Inside Social Games, the past two months have been particularly difficult for some of Facebook's most popular games. In April, over half of the top 25 games, as tracked by Inside Social
Games, lost users. And the drops intensified this past month.
Has virtual currency jumped the shark, or has it become such a mainstream phenomenon that the ability to free virtual currency might be enough of an incentive to get some individuals to eat their broccoli? Social gaming company Zynga and Green Giant, the vegetable company owned by General Mills, are going to find out.
The unlikely pair have teamed up to offer purchasers of Green Giant products free virtual currency that can be used within Zynga's most popular game -- Farmville.
Facebook has sat by and watched as prominent application developers
have made millions upon millions of dollars on its platform, primarily
through virtual currency. Not surprisingly, Facebook wants a piece of
the action and is moving to take a piece of the action.
But that may not be so easy if the results of early deal making efforts
are any indication. Application developer Zynga, which operates some of
the most popular social gaming apps on Facebook, including Farmville
and Mafia Wars, may leave Facebook and set up its own gaming social
network after negotiations with Facebook over the use of Facebook's
upcoming universal payments and credits system reportedly fell apart.
Despite the controversy over the use of CPA offers in the virtual goods market, the business of offers continues to grow.
In an effort to innovate and differentiate itself, relative newcomer gWallet is combining offers with online video. With success, it claims.
Social networking giant Facebook is reportedly going to pull in approximately half a billion dollars this year in advertising revenue. It's a significant amount, but hundreds of millions of dollars more are being made on Facebook through virtual currency transactions that Facebook has no part of.
Facebook, of course, has its own official virtual currency, Credits, but most Facebook app developers can't integrate them with their apps, and are not required to use them.
Consumers don't like paying for anything online. This is especially true when it comes to younger consumers. Common knowledge, right?
Wrong. Just ask myYearbook, a second-tier social network that caters primarily to teens. It has managed to do something many other social networks haven't: turn a profit. And it's done it by charging its supposedly frugal Gen Y users.
If you're a virtual currency millionaire in China, some potentially bad news: you won't be able to use that virtual dough to purchase goods and services in the real-world.
In an effort to stave off the ills of virtual currency gone awry, the Ministry of Culture and the Ministry of Commerce jointly announced rules that lay out the ground rules for China's virtual economy.
Three letters many of the online publishers I know love to hate: CPA.
The reason is simple: with CPA deals, the publisher only gets paid when
the advertiser makes money. Although in theory there shouldn't be
anything wrong with this (we'd all like to believe that our properties
deliver ROI for our advertisers), the reality is that most publishers
don't feel comfortable with the risk.