Why the Facebook IPO affects gaming

You have probably already noticed, if you play games on Facebook, that one of the key social aspects, that of gifting has been having a few problems recently. You may even have noticed that some games have begun to remove gifting altogether. You may, if you are of a certain mindset have begun to wonder why this is happening. Well, the reason goes back to the analyst reports that came out as part of the Initial Public Offering (IPO) of Facebook. Hidden away amongst the hype and the questions over value and the uncertainty over marketing revenue were reports on that other significant revenue stream, the money that game players pay to game producers in order to gain an advantage within the game, paying to buy hard to find items or rare boosts. Now, of course, it is perfectly possible to play most Facebook games without paying anything at all, but where is the fun in that? Game producers know perfectly well that people are naturally competitive and the revenue generated by people seeking an advantage has always been good. Of course Facebook has always taken a share of the revenue, and at the time of the IPO it was running at something like $1.9 billion dollars a year, which is not to be sniffed at.

Of course, in the world of public corporations, and the drive for returns on investment and keeping shareholders and more importantly, bankers, happy, this is an opportunity. Imagine if all those gifts that your friends send you every day, all those little helping hands were suddenly removed? What if you could still get them in the game, but the time taken to do that was rather high? Wouldn't you be tempted to maybe speed the process up a little? Maybe invest a little of your hard earned cash to make up the missing help from friends? It might even tempt you if you have never even considered paying for your gaming before, especially if the cost wasn't all that high. Of course, if that was the case, Facebook, and therefore Facebook investors would get a nice little boost in revenue for very little effort. Isn't that nice! Of course, it could just be coincidence, but add to this the previous change in the way people pay for game credits. Remember when you bought the game credits directly from the game producer? There wasn't much of an announcement but suddenly about six months ago you stated to buy Facebook credits that were then converted into game credits for your specific game of choice. This quite nicely allows Facebook far more control over spending on the site, and it is of course only coincidental that there is always a discrepancy in exchange rates between facebook credits and game credits.

What can we expect next from the newly corporate social networking site that we all love? Well, facebook is still saying that it will always be free and that might well be the case, but what about subscription gaming? The model is already in place, World of Warcraft being the obvious example, but would social gamers stand for this? It is interesting to note how many people become addicted to games on facebook. Far more so than in other environments, and this will make it far harder for people to throw away all that gaming enjoyment if the subscription is not too high. We will have to see where things go on this one, but don't be surprised if the cost of your enjoyment of gaming on facebook slowly starts to creep up. But hey, it's only money.....