Inside Social Games

When it comes to social game monetization, usually you expect to hear about advertising, virtual goods or currency, or occasionally something a little more creative. However, New York-based PayoutHub is taking a different approach entirely: the new startup has built a service allowing online game developers to actually monetize using cash prize-based tournaments.

The concept is simple: People like money, and some are willing to “wager” a little bit to try to prove their mettle and win more cash. Game creators are able to quickly integrate the PayoutHub service into their games and start hosting tournaments quickly. Once a tournament begins, players buy-in to add to a prize pool using either credit cards, Paypal, or completing free offers. When someone wins, the jackpot is distributed to the winners via check or electronic payment, with both PayoutHub and the developer taking a cut.

To keep things simple, PayoutHub handles all payments and payouts on their side so long as the game is capable of sending them some sort of player score. Currently, the service supports mobile, web, and social network games. Despite its short existence, the monetization service has already launched with 20 games from 7 developers, including two from Facebook and one from the iPhone (Edit: as clarified by the developer of PayoutHub, the stated “iPhone” game is actually a title for Sony PSP called Kitty Cannon. The current negotiations with various iPhone developers has not yet been sealed.).

Regarding potential legal questions, it’s important to note that the service is not the equivalent of traditional gambling. These tournaments are considered “skill-based” and are, in fact, very legal throughout the most jurisdictions in the United States and Europe. Of course, the qualifier here is “most,” so it would be wise to research laws in your area just to be safe.

Beyond legalities, security issues could also be a challenge, but PayoutHub says it does all it can to ensure secure transfers of scores and results, and will not hesitate cancel a tournament should they suspect foul play is involved. If that happens, player buy-ins are refunded.

For developers interested in exploring alternative monetization opportunities for challenge-based games, take a look at PayoutHub.