Inside Social Games

Though it is still technically a social network, it would seem that Hi5 no longer refers to itself as such. Rather, it claims to be more “social entertainment” as it continues to make changes that differentiate itself from other competitors. After going through significant organizational changes in recent months, he company is attempting to become more a blend of Facebook and a games portal with its global reach of 62 million users across 60+ countries.

Unlike its competitors, the company is looking to its new games, gifts and Hi5 Coins to make its revenue on the international level. “We’re in a rare situation where we have a large number of users who love a certain type of content, and we have a large number of developers worldwide who want people to play their games. If you look at the worldwide distribution network for games, you have a value chain that makes that process costly,” says Hi5 Executive Producer Andrew Sheppard. “The whole purpose of the universal [virtual] currency [Hi5 Coins] and why we’re working with our content partners is predicated on the notion that if we create the best experiences for our users we create a very compelling ecosystem for all of our partners involved.”

“Experience” is the key word here. With MySpace or Facebook games, made by any number of third parties, the user’s experience is more loosely related to the overall experience while using the platforms. However, hi5 is looking to make the use of the Coins more tightly knit with all to the gaming elements that make up the Hi5  experience. In addition, it offers another means of monetization for game developers as an incentive over other social networks.

However, taking payments globally to power these currency systems is no easy task, which is part of the reason why Hi5 partnered with PlaySpan. hi5 also recently partnered with global mobile payments network, Paymo, allowing users from 24 of Hi5’s 60 countries to make purchases without a credit card through their mobile phone.

The objective is to become able to monetize more like an online gaming company. It wants to avoid primarily depending on advertising like Facebook.

“In the space that we’re in with the types of users we have, you can monetize in a very different way. It’s a place they can have fun and express themselves and meet people, things that are all frankly hard to do on Facebook,” says Hi5 Vice President of Marketing, Michael Trigg. “They lend themselves particularly well to virtual goods use. If you want to meet a new person you can give them a gift or subscribe to a certain VIP status on the site. They let people express status and a cool factor. We think it opens up really well to monetizing future entertainment.”

The comment is almost an understatement considering all the partnerships we have seen over the past few months in order to “open up” the system. And based on comments from Sheppard, Hi5’s announcements are far from done. In fact, he is currently in charge of ten different projects (ranging from new virtual gifts to branded virtual goods) pertaining to the improvement of the new “social entertainment” focus.