Zynga Switching to Exclusively Use Credits in Its Facebook Games

Facebook began signing five-year agreements with developers this spring, working to guarantee that its virtual currency, Credits, will soon be the exclusive payment option for virtual goods in all applications on its platform.

As part of this, Zynga, the largest and most powerful developer on Facebook, is readying a switch to using Credits exclusively, according to multiple sources. The move will happen sometime before the end of the year, and possibly as soon as the next month or two. When Zynga signed its five-year contract with Facebook in May, Credits exclusively was part of the deal — the two companies just didn’t say so.

[Update: The official joint statement from Facebook and Zynga, confirming the deal: "Facebook and Zynga have transitioned Facebook Credits to be the exclusive method of payment for most Zynga network games on the Facebook platform. The companies are committed to working together to provide the best possible customer experience during this transition." It appears that the only Zynga title on Facebook not using Credits is Texas HoldEm Poker. Also, third party offer and game card providers continue to appear in most games, likely meaning that users can still buy in-game virtual currencies directly without going through Facebook.]

Facebook says it expects that over time Credits will be the main way that applications and people transact on Facebook Platform, although it hasn’t officially stated that Credits will be mandated. However, given that large developers like Zynga will lose millions in at least the short-term due to the switch, we believe Facebook has required that they all use Credits exclusively despite protests.

Credits have, of course, been offered as an option in most Zynga games for many months (excluding Zynga Poker), with Zynga experimenting with various interfaces to show it among other payment options. The latest payment flow visible in FarmVille today, as you can see below, and it is using Credits exclusively. Interestingly, the flow appears to let you pay directly for virtual currencies in games using a credit card. However, if you complete the transaction, you’ll get an email confirmation from Facebook Credits saying that you have bought the in-game virtual currency (either Farm Cash or Farm Coins) in the game. Facebook says this payment flow is easier for players, who might otherwise be confused about first having to buy Credits.

Zynga is joining the other largest social game developers on Facebook in switching to Credits as the sole payment method for virtual currency and virtual goods. CrowdStar introduced the first Credits-only game last fall, testing out Credits late last year in Happy Island; it eventually signed a five-year contract in June. RockYou signed on the next month, and Playdom, which is currently the second-largest developer (but still only a fifth of Zynga’s size) did too. Neither Playdom or RockYou has made the full switch to exclusively using Credits yet, but also will within the year. EA’s Playfish, which has been relatively quiet with Credits, has also been testing the currency in its games, and we expect it will move over along with the others.

The list doesn’t end there — mid-sized companies like Lolapps and Wooga have also told us they’re using Credits, and it appears that a large portion of smaller developers have at least started offering Credits as an option, too. Overall, Facebook says that 70 developers are offering it in around 150 applications, with a waiting line of developers wanting to get into the still-closed beta test.

The details of the five-year contracts have remained secret, but by going first, Zynga showed the way for other top developers. Because it is the largest business on Facebook — the company is on track to make more than $500 million this year, according to our Inside Virtual Goods report – it will be paying Facebook the most money out of any developer when it begins using Credits exclusively, or 30 percent of its payment revenue on Facebook.

One other point, here: neither Zynga nor other developers are getting a break, according to Facebook — everyone gets the same terms. Following the agreement, rumors had circulated about Zynga if not other developers getting some form of ad rebate or other discount in exchange for the agreement.

Zynga can still attempt to pull players of Facebook to destination sites like FarmVille.com, where Credits aren’t an option at all, but so far Facebook has continued to be the main way that social games have grown and maintained users. Even with the new costs, Zynga needs to be on Facebook going forward.

Credits itself continues to grow, with Facebook adding more payment partners to help get money flowing through the system. Zynga’s arrival could significantly increase the liquidity of the overall system, meaning that Zynga players who migrate to other games will bring their Credits with them, ready to spend.

That, in turn, could help out Credits, all developers, and Zynga itself.

We’ve covered Credits extensively in the past. Here are some links to previous stories:

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19 Responses to “Zynga Switching to Exclusively Use Credits in Its Facebook Games”

  1. Bart says:

    I’d be very very surprised if Facebook lasted another 5 years and signing a contract like that in the beginning of explosive change and innovation around the web is a silly move. Friendster used to be a sure thing, as well as Myspace. look what happened to them in a period of 2-3 years. Infinite retention/growth just doesn’t happen and that cycle rate is getting squeezed. I thought Marc Pincus had better business sense than that.. but hey.. leave the trash on a leaking barge.

  2. Zynga Now Officially Using Credits Exclusively in All of Its Facebook Games says:

    [...] In the culmination of an effort that began in earnest last year, Facebook has gotten Zynga, the largest social game developer on its platform, to start using Credits exclusively in all of its Facebook games. The two companies have just confirmed to us that Zynga has pushed Credits-only flows to its games, as we cover in more detail over on Inside Social Games. [...]

  3. Sarah says:

    Bummer. I occasionally pay to play Mafia Wars or Poker. But I will *never* give Mr. Zuckerburg my credit card. He’s broken trust so so so many times with my personal info. No way he gets access to my financials (or even my PayPal account name). Sorry.

  4. Juliette says:

    It’s crushing that 30% of my hard earned doesn’t go into the game but into Facebook’s own pockets instead. I don’t think anybody would mind at all if they were paying the same rates that credit card companies charge or PayPal. It seems the only basis for Facebook being able to charge 30% is that they can force people to.

    It’s a shame Zynga has caved as it looks like threats that they would pull out of Facebook were never really genuine since they would lose so much money – and now Facebook can do as Apple does and treat everyone like dirt because they have total control. Yeah, it’s their network so they can do as they please – but so could the Soviets.

    Here’s hoping the new Google network isn’t quite as totalitarian.

  5. About Face « Virtual Currency News says:

    [...] Inside Social Games ” Facebook says it expects that over time Credits will be the main way that applications and people transact on Facebook Platform, although it hasn’t officially stated that Credits will be mandated.” [...]

  6. Mike says:

    Does this mean we cannot use our own Paypal (even though they are notorious people limiting accounts with false accusations for their own bank interest)

    Also Offerpal etc are they being forced out?
    How can we use ads to monetize ourselves?

  7. Ryan says:

    After reading all the news about competitors getting signed to Facebook with using facebook credits, and thereby throwing everything in a blender.. I’m really looking forward to Google opening their social network .. Here’s hoping they have a great payment and developer section in place.

    I like paying for games on facebook.. but I will NEVER give facebook my personal credit information. Their privacy issues are a joke.. and their dumbass founder at the wheel is just proving to be more and more embarrassing for them.

    Facebook will lose members eventually.. maybe not in the next few years because let’s face it.. Facebook is different than friendstar and myspace, it has a very high population and tons of companies work with it.. no way they’re going to drop off.

  8. Mike says:

    Yeah
    I hope Google open soon too and let individuals make their game ideas with help as 80,000 odd dollars is far too much for the individual to get going and not all people want or can hire people in business to do that.
    Also its more or less impossible to get big companies to licence your own product I have tried that believe me.
    Some poeple in big companies even try to phise what your game is pretending they are interested to licence and then when your smart realising they are up to something they turn round and say OH we are not interested.
    Shameful

  9. Most Top Social Games Are Already Using Facebook Credits says:

    [...] our story on Wednesday about Zynga’s switch to exclusively using Facebook Credits in its games, the inevitability of a Credits-only platform has become closer than ever. But how [...]

  10. As Developers Continue Adopting Credits, Facebook Tests Out New Payment Flow says:

    [...] week, Facebook officially announced that Zynga, the largest developer on the platform, was going to make Credits the exclusive virtual currency [...]

  11. What Zynga’s Switch to Credits Means for the Facebook Ecosystem says:

    [...] week, Facebook and Zynga announced that Zynga is now using Credits as the exclusive direct payment method for its premium virtual currencies in its games running on Facebook. While you can still get [...]

  12. Короткой строкой « inSocialPlay — блог об играх для социальных сетей says:

    [...] начала сентября Facebook Credits стали эксклюзивным платежным средством в большей части игр [...]

  13. A justification of Facebook’s $33bn price tag | The Equity Kicker says:

    [...] Zynga Switching to Exclusively Use Credits in Its Facebook Games (insidesocialgames.com) October 4th, 2010 | Category: Advertising, Facebook blog comments powered by Disqus var disqus_url = 'http://www.theequitykicker.com/2010/10/04/a-justification-of-facebooks-33bn-price-tag/ '; var disqus_identifier = '2545 http://www.theequitykicker.com/2010/10/04/a-justification-of-facebooks-33bn-price-tag/'; var disqus_container_id = 'disqus_thread'; var disqus_domain = 'disqus.com'; var disqus_shortname = 'theequitykicker'; var disqus_title = "A justification of Facebook’s $33bn price tag"; var disqus_config = function () { var config = this; // Access to the config object /* All currently supported events: * preData — fires just before we request for initial data * preInit – fires after we get initial data but before we load any dependencies * onInit – fires when all dependencies are resolved but before dtpl template is rendered * afterRender – fires when template is rendered but before we show it * onReady – everything is done */ config.callbacks.preData.push(function() { // clear out the container (its filled for SEO/legacy purposes) document.getElementById(disqus_container_id).innerHTML = ''; }); config.callbacks.onReady.push(function() { // sync comments in the background so we don't block the page DISQUS.request.get('?cf_action=sync_comments&post_id=2545'); }); }; var facebookXdReceiverPath = 'http://www.theequitykicker.com/wp-content/plugins/disqus-comment-system/xd_receiver.htm'; var DsqLocal = { 'trackbacks': [ ], 'trackback_url': "http://www.theequitykicker.com/2010/10/04/a-justification-of-facebooks-33bn-price-tag/trackback/" }; (function() { var dsq = document.createElement('script'); dsq.type = 'text/javascript'; dsq.async = true; dsq.src = 'http://' + disqus_shortname + '.' + disqus_domain + '/embed.js?pname=wordpress&pver=2.50'; (document.getElementsByTagName('head')[0] || document.getElementsByTagName('body')[0]).appendChild(dsq); })(); [...]

  14. EA/Playfish Also Signs Five Year Deal to Exclusively Use Credits on Facebook says:

    [...] CrowdStar, Zynga, Playdom, RockYou and most other social game developers on Facebook, EA’s Playfish has [...]

  15. EA/Playfish Signs a Five Year Deal to Exclusively Use Credits on Facebook says:

    [...] CrowdStar, Zynga, Playdom, RockYou and most other social game developers on Facebook, EA’s Playfish has [...]

  16. Facebook Tests “Pay Later” Option For Buying Virtual Goods says:

    [...] has signed deals with all the top social game developers including Zynga to make Credits the exclusive direct payment method. With plenty of games that accept Credits, the [...]

  17. Facebook Testing “Pay Later” Option for Virtual Goods says:

    [...] has signed deals with all the top social game developers including Zynga to make Credits the exclusive direct payment method. With plenty of games that accept Credits, the [...]

  18. Street Rally says:

    This is how people in the app and game developing world is earning millions! lol Thanks for sharing this article here. This is the sole reason why my credit card has been used so frequently recently. lol

  19. Zynga Readies Switch to Facebook Credits - AllFacebook says:

    [...] Credits was already an option for most Zynga games, with the exception of poker. (Inside Social Games reports that poker will be making the transition eventually as well). Now third-party payment [...]

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