Facebook shares new documentation for local currency pricing, sets migration for Q3

creditsFacebook today provided updates regarding its transition from Credits to local currency pricing. The company offered new documentation for game developers and announced that migration will occur in Q3 this year.

Facebook decided to phase out Credits in favor of a user’s local currency — dollars, pounds or yen, for example — in June 2012. This allows the social network simplify the purchase experience and give developers more flexibility. Developers will be able to set more granular and consistent prices for non-U.S. users and price the same item differently on a market-by-market basis, as opposed to pricing their virtual goods in $0.10 USD increments as was required when Credits became mandatory in July 2011. This also eliminates any confusion that resulted from users trying to think about conversion rates for dollars, Credits and in-game currency.

Facebook subscription payments come out of beta, now available for all app developers

Facebook today announced that subscription payments are now available to all developers with apps on the site.

The company originally announced the program in beta with Zynga, Playdom and Kixeye as partners in June. Now any developer can offer subscriptions for virtual goods, premium experiences or updated content within their apps for a monthly fee. See an example from Disney Playdom’s Gardens of Time below.

Developers can set different prices based on a user’s local currency and offer different levels of subscriptions. They can also offer free trial periods. This flexibility could help developers better monetize their apps. The model could also lead players to spend more in games and also makes Facebook a better option for developers of free-to-play browser-based massively multiplayer online role-playing games. It might also be a start to getting non-game developers to try the social network’s payment platform. For example, professional networking app BranchOut or news apps like Washington Post Social Reader might find uses for subscriptions. However, Facebook will take a 30 percent fee from these transactions.

Developers can combine subscriptions and in-app payments. For instance, a game might offer a monthly subscription for energy or supplies and sell vanity items through in-app purchases. Users can pay for subscriptions with a credit card or PayPal account, and they can cancel from their Facebook payment settings. Facebook recommends that developers provide a cancel option from within their apps as well.

Developers can learn more about implementing subscription payments here. Daily transaction data about subscriptions will be available for download through the payments reporting API introduced on Monday.

This post originally appeared on our sister site, Inside Facebook.

Zynga signs Playdemic, Konami, Rebellion for games platform, revenue share split 70/30 after Facebook

Zynga announced three new partners for its social games platform today at the Game Developers Conference, two of which come from the console games industry. A source with knowledge of the publishing agreements tells Inside Social Games that the revenue share for all Zynga partners is 70 percent of whatever is leftover after Facebook takes its 30 percent cut of Credits transactions.

Rob Dyer, head of publishing at Zynga, declined to comment publicly on the revenue split. He did say, however, “I want to provide a level playing field.”

That apparently extends beyond the money and into the game developer community. With the three new developers announced today — Playdemic, Konami and Rebellion — Zynga’s six partners represent both established social game developers and first-time indie developers. Dyer’s statement could also apply to game genres, as the Playdemic partnership brings Café World competitor Gourmet Ranch under Zynga’s umbrella.

“If I had my druthers, I would pick games that aren’t in genres Zynga develops,” Dyer admits. “If you look at Playdemic, they’re direct competitors — Gourmet Ranch and Crossword Buddies are [like] games we have in our wheelhouse. I purposely went after them to show people that we’re serious about publishing.”

Zynga’s nascent games platform, Zynga.com, faces a dual challenge: it must present a stable future to developers and investors, and it needs to update Zynga’s image as a money-hungry machine that clones games it can’t buy to out-perform the competition. Signing partners to its platform can address both needs, depending on the partners Zynga chooses. The first three developers announced for the platform — MobScience, Sava Transmedia and Row Sham Bow — are smaller studios with little to lose if Zynga decides to copy their games or change the revenue share split at a moment’s notice. Playdemic could also be put in that box, given the rough 2011 it had with publisher RockYou that started with an acquisition and ended with them being sold back to the founders.

Konami and Rebellion also make for strange bedfellows as both developers have little to no experience in social games. Konami at least has successful mobile social titles in Japan on both GREE and DeNA’s Mobage platform; in its Q2 FY2012 earnings report, the developer said social games revenues were nearly equal to its revenues from console video game sales, as reported by GameSpot. Two years ago, however, Konami had a rough experience in porting its Castlevania franchise to Facebook — that app appears to have been removed. Rebellion, meanwhile, hasn’t ever made a social game and its primary experience is in licensed intellectual property video games like Aliens vs. Predator and The Simpsons.

The Zynga.com platform currently hosts five of Zynga’s top-performing games — CastleVille, CityVille, Hidden Chronicles, Words With Friends and Zynga Poker — each of which runs synchronously on Facebook. All transactions on the platform are currently conducted in Facebook Credits, which takes a 30 percent transaction fee of in-game purchases. The key features of the platform include social discovery of potential “games only” friends, a games activity live ticker that speeds progression in collaborative gameplay, a chat window and a sort of leaderboard that tracks how many times a Zynga.com player answers other player requests in specific games.

Dyer tells us that platform partners are expected to provide consistent gameplay experiences between titles. Additionally, Zynga says it will provide analytics and back end technology to partners that provides scalability. Beyond Playdemic’s Gourmet Ranch and Crossword Buddies and Row Sham Bow’s Woodland Heroes, no other partner games have been announced.

As for when we can expect to see the games on Zynga.com, Dyer says, “When products are ready, they’re going to ship.”

Blogging Inside Social Apps: Emerging International Opportunities for Mobile and Social Developers

We’re at the San Francisco Design center, blogging Inside Network’s third annual Inside Social Apps conference.

Following a short afternoon break, we resumed with “Emerging International Opportunities for Mobile and Social Developers” moderated by AJ Glasser. She is joined by GREE’s VP Marketing, Social Games Sho Masuda, Popcap Games’ VP of Worldwide Publishing Dennis Ryan, Vostu’s Chief Scientist Mario Schlosser, and 6waves Lolapps’ Chief Product Officer Arjun Sethi.

The following is a paraphrased transcript of the discussion.

AJ: We’ll start by discussing the different regions that you’re seeing the most growth in. Where are the largest growth opportunities in your opinion?

Dennis: For us it’s where we’re investing. Three years ago our business outside the Americas was about 10 percent of our business and now it’s about 30 percent, particularly China and Japan. Not to see that other markets have less opportunities, but that’s were we chose to invest.

Arjun: We’ve always monetized in China and Japan. We recently went onto Tencent in China. On Facebook we’ve had a lot of luck in European countries, but Facebook is also growing in Japan. On Android and iOS we’ve see growth in China and Japan – downloads in China and revenues in Japan.

Mario: We’ve seen a lot of growth in Latin America.

Sho: For GREE we’ve seen new users coming from the US and the UK. We’ve seen growth in Korea and China. In terms of market revenues, the US is very important to us, but we’re focusing on a lot of regions.

AJ: So as developers are expanding internationally, how do you approach localization and forming a cultural relationship in each region?

Dennis: We take a country specific approach because we’re trying to build our brands as multi-platform experience. They’re on mobile, console, PC and mac and we try to invest where we can execute that strategy in its entirety.

Sho: We think of localization as making the content meaningful to a region, not just changing the language. We just signed a partnership with five companies. With our new platform, we know its difficult to launch in the Asian market. As a platform we need to provide solutions to help developers penetrate that market.

AJ: How do you choose North American partners?

Sho: We’re working with 2nd parties, like our acquisition of OpenFeint. we’re always looking for a partnership that will benefit both us and them.

AJ: What are some mistakes you’ve seen developers make when they take a game into an international market?

Arjun: Taking the approach that if a game is success on Facebook, you can just take the game into another country and just slap it in. It doesn’t work.

AJ: What about Plants vs. Zombies on Renren?

Dennis: I think we got 50% of that right. In China we decided to take a long term view — we build a studio there. That was right. Another thing we got right was we knew we needed to build a different game, so maybe we got more like 2/3 right. The game on Renren is more competitive and its got different monetization. That’s a start, but in the end it didn’t work on Renren. We and Renren both did a great job launching it and it started with 500,000 DAU but its deteriorated since launch, so at some level we know it’s not working. We haven’t given up.

AJ: What about your experience entering the US with games that were popular in Brazil and on Orkut?

Mario: It depends on the game. Our recent games have done better on Facebook. When you expand to a different country, I would almost look at the city level rather than a country level. 95 percent of viralization works on a city by city basis. In the US now, we don’t have a massive audience, so it’s hard to scale it. When we went into Argentina and Mexico we were able to jumpstart the audience by engaging local bloggers. The stuff we’re launching now we can put more hooks into.

AJ: Everyone is talking about Japan and its massive ARPU like its a golden fleece. What are some mistakes people make when getting into Japan?

Sho: To be honest, it’s hard to say, because everyone’s objective will be very different. Just because you’re not in the top 25 grossing apps doesn’t mean your not doing well. I think there are 3 pieces of advice for someone looking at Japan. One, even if your not thinking about penetrating the East Asian market, think ahead and be ready for future localization. Two, do your due diligence and research. See what similar titles and your competitors are doing. If they’re doing well, you could do well too. Three, start fast. Thanks to Google you can reach market outside the US very easily. You can out to small groups of audiences in a region and see if it’s working. If it is, then you can expand. Speed is important — if you’re not doing it someone else will take it.

AJ: Do you set goals by ARPU rate by region? Do you assume you’ve failed if you’re not monetizing at the peak ARPU rate for a specific country?

Arjun: No. For example, if you just look at the US market and you don’t hit the average ARPU, it doesn’t mean you’ve failed. You have to look at what type of game it is. When you talk about Asia you’re looking at Korea, Japan and China. If you’re not hitting the average ARPU it could depend on the the kind of game your making. Casual and hardcore games have very different ARPU. A game in Korea can make up to $1 million a month just in Korea and just from the Korea app store. That’s why we acquired a studio called Smartron5 just to make games in China.

Sho: It’s dangerous just to look at ARPU and say if it doesn’t hit your focus it’s a failure. It’s more important to look at engagement and retention. How does your DAU compare to your download rate? Engagement is the most important factor.

Mario: You can even see very different ARPU with the same demographics on different platforms. In Brazil there’s a lot of friction around Facebook credits. Even with the same game and the same demographics a game can monetize four times higher on Orkut than on Facebook in Brazil.

Dennis: Its not sufficient to focus purely on ARPU and monetization – you have to go by country and by genre. For example for our Facebook game Bejeweled Blitz the monetization rate is pretty similar in the UK, US and Canada, but in Australia it will sometime monetizes 20 – 40 percent higher. In Japan it’s not unreasonable to expect a 5x monetization rate.

AJ: Is that the same game in Japan?

Dennis: Same brand, different game.

AJ: What the challenges of introducing a brand to a new country?

Dennis: For English speaking countries it’s not as much of a challenge. For the Asian markets it will need to be re-implemented and rethought. You have to believe in the core brand. We give our Chinese and Japanese offices the leeway to do that. Even if the mechanics and monetization are different its still the same core brand.

AJ: What was your experience with Ravenwood Fair?

Arjun: When we first took the game to China we gave our partner the leeway to change the game to local tastes. We did see some high engagement and monetization for the beginning but it began to drop off after a week, which means we probably didn’t do a good job. When we looked at Tencent we looked at game from the the ground up.

AJ: Do you see any trends or behaviors by region? What genres are popular in different regions?

Arjun: Worldwide, everyone plays puzzle games. Games like mahjong and poker are pretty popular worldwide with the exception of some countries. Some genres go across the spectrum, but other games wouldn’t be as great in specific countries and regions.

Mario: We had a poker game. It had crappy retention and we were quizzing users about why they weren’t playing and they said they had no idea how to play poker. People didn’t know the rules and it didn’t work out. The games are the real brands. We try to put Vostu in front of people’s faces, but it’s hard to get people in love with the manufacturer of a game – its the actual game they care about.

Sho: There’s definitely certain categories that do well. In Japan RPG and card battle games are always popular, but it’s dangerous to assume that category will always be popular in that region. You should look at your content and assets and do a test. It’s not wise to limit yourself.

Audience Question: What do you see as the potential in India?

Arjun: One of the things that india has a problem with is payment models and methods. Right now it’s controlled by the carriers. Some will charge 80% of the cost of a transaction, so the margins aren’t there. It’s also really cash focused economy, a pay-as-you go economy. It’s not credit card focused. I think it could be there in 8 to 10 years. I think you could look at the evolution of China and see something similar in India eventually, but I wouldn’t be excited to jump in there.

Tapjoy Actively Explores a Sale With Zynga, Japanese Giants DeNA & GREE as Candidates

Tapjoy, which works with developers to distribute and monetize their apps, is actively exploring a sale, according to several sources with knowledge of the company’s discussions. Possible candidates include Zynga and the Japanese mobile gaming giants GREE and DeNA.

The company’s chief executive Mihir Shah denied that the company was for sale. “I can’t comment on rumors or speculation.”

He added, “We’re at a level of scale and the market opportunity is so large and we’re so clearly in the lead that there isn’t really any direct viable competitor. We just continue to be focused on building this ridiculously exciting business.”

However, sources familiar with the company’s discussions say it has been actively pursuing talks with strategic acquirers like Zynga, Electronic Arts, GREE and DeNA and that it has been filling out its executive ranks ahead of either a sale or a public offering. The company did hire a chief financial officer in July named Al Wood who had led two companies through the IPO process.

Read the rest on our sister site, Inside Mobile Apps.

Hardcore Social Game Company Kabam Gets into Pre-Paid Gift Card Business

Kingdoms of Camelot developer Kabam is following in the footsteps of industry leader Zynga by releasing its own pre-paid gift cards.

Players will be able to convert the gift cards, which will be available in $25 and $50 denominations, into in-game currency for any of Kabam’s Games on Facebook or its website. Google+ is noticeably absent from the list of supported platforms; Kabam tells us it hopes to set up a program with Google to support the game cards at some point in the future.

Purchasing pre-paid cards is a common practice for larger social game and PC game developers. Market leader InComm has signed deals with companies like Disney, Playdom, Nexon, Sony and Blizzard to create cards for their games. It’s a business that brought in $8 billion in retail transactions as far back as 2007.

Among social game developers that got their start on Facebook, Zynga was the first into the market, unveiling its own branded cards early last year that weren’t tied to Facebook Credits, allowing players to redeem the cards on Facebook and on Zynga’s standalone sites like FarmVille.com. Incidentally, Zynga’s can be redeemed on Google+.

Kabam’s cards can be used in its Facebook games Dragons of Atlantis, Edgeworld, Global Warfare, Glory of Rome and Kingdoms of Camelot, as well as in The Godfather: Five Families, which is currently only available on Kabam’s site. The cards are available at Best Buy and GameStop.

The Sims Social: Revenue Forecast and Growth Potential

While it looks like The Sims Social may have lost its chance to pull ahead of Zynga’s CityVille in traffic during 2011, the game could potentially be one of the top-grossing Facebook games of the year.

EA Playfish’s life simulation game has captivated the media with its massive growth, but as the game enters the mature part of its lifespan — where traffic decreases as average revenue per user rises — we turn our attention to the revenue potential, estimating an annual run rate of at least $82 million to $163 million. Our bullish estimate is based on the game’s current demographic spread and monetization activity, EA Playfish’s probable expansion plans in the next few quarters, and the overall strength of the Sims franchise brand. This report will explore key factors behind this revenue forecast in greater detail.

Demographics of Sims Social

Tom Mapham, executive producer for The Sims Social, reports that the game’s largest player demographic is between 25-35, slightly skewed female. Mapham believes a significant percent of these players were PC or console gamers who became familiar with the Sims franchise in their teens.

This demographic pattern contrasts significantly with the bulk of previous Playfish games, such as Restaurant City, which is 65% female and a majority of players 25 and younger. Compared to these and many popular social games, The Sims Social appeals to an older, more gender-balanced playerbase. This has important implications for monetization: According to data collected for our Inside Virtual Goods report series, male gamers between the ages of 18 to 34 tend to monetize in freemium games at higher rates than most other demographics. If Mapham is right, it’s probable this segment will contribute significant revenue to The Sims Social, joining the “Facebook moms” segment who are already prone to monetize at high rates.

Monetization: Revenue Estimates and Virtual Goods in The Sims Social

Our forecast of The Sims Social’s $82 million to $163 million annual run rate is based on two key assumptions:

– That The Sims Social game generates $1 to $2 in revenue per month per daily user, per month. This is a typical revenue pattern for a well-monetized simulation game, according to Inside Virtual Goods.
– That EA Playfish can sustain or exceed the game’s current levels of engagement for a full year.

The Sims Social currently has 6.8 million DAU, and therefore, we estimate it to be earning $6.8-13.6 million in revenue per month, which annualizes to $82-163 million. However, it’s probable that total revenue will be closer to the high end of this forecast, due to the game’s very monetizable user demographics (see above), and EA Playfish’s expansion plans and merchandising (see below).

This estimate is within range of forecasts from two leading video game industry analysts. The first, M2 Research Senior Analyst Billy Pidgeon, estimates that Sims Social will earn $110 million in annual revenue or fall somewhere in a range of $100 million to $120 million. His forecast assumes that 3 to 5% of the playerbase will convert to paying customers, with 3 to 5% of that monetized segment becoming “whales,” (defined here as users that spend in excess of $25 per month on at least one game). Pidgeon’s revenue estimate also takes into account a certain percentage of churn-out after eight months, and relatively strong overall conversion rates. In this, he cites an October analysis by Raptr, a consumer-facing gameplay tracking service, which reports strong conversion of its userbase to EA Playfish’s Facebook game. Pidgeon stressed that $110 million is a conservative estimate, “and it could certainly over-perform,” even taking into account the volatile market of social gaming.

The second analyst, Wedbush Morgan’s Michael Pachter, estimates The Sims Social to be earning $80 million to $160 million in annual revenue. “Electronic Arts said at a recent conference that it expects 2 to 4 cents per DAU,” he tells us. “So roughly 10 million DAUs time 365 days times $.02 equals $73 million at the low end and $146 million at the high end.” For his published estimate, he rounds up to the $80million to $160 million.

Again, the more bullish forecast which approaches or exceeds $163 million in annual revenue is due to the high number of male gamers 25-35 playing The Sims Social, who tend monetize at higher rates than most other age/gender segments. On top of this, recent and upcoming additions to the game will also increase Sims Social’s revenue potential.

What Sells in Sims Social: Categories and Trends

In terms of the particular virtual goods that generate the most revenue in The Sims Social, Playfish’s Tom Mapham reports two categories:

Gameplay or consumable boosts — One-use items that expand or enhance a player’s gameplay, like energy refill items.

Durable virtual goods — Items that are persistent in the game environment beyond a single use. In The Sims Social, this is largely decoration items for the player’s Sim, the Sim’s virtual home, or items with functional benefits that satisfy the Sim’s needs. As the needs mechanic is a core gameplay element to The Sims Social, this provides a unique revenue stream for the game where players are more or less required to purchase items like beds or toilets to achieve winning conditions in the game.

Durable virtual goods that enable new gameplay experiences — Building off of the needs-satisfying items described above, this category of virtual good allows the player to engage in different gameplay activities when purchased. For example, a single-bed allows the player’s Sim to perform sleeping or napping actions while a more expensive double-bed item allows the Sim to engage in sleeping, napping, and sexual intercourse actions (referred to in-game as “WooHoo”). Other items — like a stereo or a gazebo — allow Sims to dance. These item-based interactions also feature a viral component where a player can share the activity on other players’ Facebook Walls, thereby attracting more users to purchase the item.

Near-Future Growth Potential for Sims Social

As our AppData chart below indicates, The Sims Social has recently entered a period of decline across monthly and daily active users as the game transitions into the mature part of its lifespan. (Note that the mid-October sharp drop in MAU reflects a Facebook update to its accounting methods for active users across all apps.)

It is typical for most social games to experience a tapering off effect in their third or fourth month as users with lower lifetime value exit the game and high lifetime value users remain. However, during EA’s Q2 FY2012 earnings call in late October, executives hinted that the company planned to drive second stage user growth in The Sims Social with “expansions.” This term can be applied to small-scale content updates or larger gameplay experience adjustments or additions that run within the app.While declining to detail specifics, EA Playfish’s Mapham indicates that these new features would be similar to the Sims franchise’s popular expansion packs, which tend to offer new gameplay experiences — for example, the recently-released Pets expansion for The Sims 3 PC game. Based on both past performance of Sims expansions and social games currently experimenting with similar content, these additions will likely drive a new growth curve that lasts approximately one to two months.

Additionally, EA is currently exploring merchandising options that could bring new users into the game. For example, in October, the company launched a $15 Facebook Credits gift card branded with The Sims Social that also included a special Sims Social item included in the purchase. Good through Christmas, these gift cards will be sold at Walmart, placing The Sims Social in one of the world’s largest retail chains. Our “Future of Social Gaming 2011” Inside Virtual Goods report estimated the total market opportunity for prepaid cards to be $200-250 million in 2010 revenue, with compound growth rates of 50% to 100% expected for 2011. Much of this revenue will be earned by top Facebook games like The Sims Social. For a rough and conservative estimate, assume 3-5% of The Sims Social’s monthly 36.5 million users purchase one of these Walmart cards (or are given them as gifts). This would translate to $16 to $27 million in revenue on top of revenue earned directly through the game.

In addition to the Walmart prepaid card, the existing brand awareness of The Sims franchise cannot be overstated. The Sims has sold over 140 million copies, including sequels and expansion packs across multiple platforms since the original game launched in early 2000, with the latest expansion, Sims 3: Pets, just released for PC, Mac, PlayStation 3, Xbox 360, Nintendo 3DS, Wii, and Nintendo DS. As awareness and sales of this expansion and other Sims offerings continue over the holidays and beyond, expect some carry over interest to benefit The Sims Social. Whereas most social games rise or fall on the strength of the game experience, EA Playfish’s offering also has over a decade of market awareness and broader franchise strength to draw from.

Final Thoughts on The Sims Social’s Place in Social Gaming History

The Sims Social is unique among social games both in its PC game franchise origins and in the massive growth achieved on the Facebook platform. Given the both the game’s size and the clout of its developer, it’s inevitable that comparisons to Zynga’s CityVille will dominate media discussion as EA continues to release games on Facebook and Zynga moves closer toward its IPO. This discussion lacks context, however, as The Sims Social is a completely different gameplay experience and a much younger product with just 83 days of life on Facebook so far. Rather, we learn more from examining the revenues of The Sims Social, finding that as new game types are adapted to social network platforms, games kind find new — and more profitable — ways to monetize.

Facebook Testing “Facebook Credits for Websites” That Helps Third-Party Sites Sell Virtual Goods

Facebook has just announced a closed, limited test in which for the first time it will allow websites to process payments for virtual goods using Facebook Credits. Facebook’s virtual currency is currently the mandatory payment method for all Facebook games on the web, a payment option for Facebook apps, and became available as a payment option to mobile app developers last week. The only initial launch partner for “Facebook Credits for Websites” will be online and downloadable games site GameHouse that until now only accepted payments through credit card and PayPal.

During the test, Facebook will closely monitor the demand for Credits as a payment method and the user experience of those that pay though its virtual currency. If a high enough percentage of users make purchases through Credits and feedback is positive, Facebook may expend additional resources to let more websites add Credits as a payment option.

Eventually, Facebook might open the option to all web developers selling virtual goods or digital media, allowing the social network to earn a 30% cut on transactions across the web. In exchange, sites will be able to provide an easier way to buy their goods and media than punching in credit card or PayPal details. Facebook has provided a signup page for developers that want to try Facebook Credits for Websites if the test is expanded.

GameHouse users that sign in to the site with their Facebook login and play Collapse Blast or UNO Boost will only see Credits as a payment option, not credit cards or PayPal. If they choose to buy virtual goods or proprietary in-game currencies, Facebook Credits will be deducted from the same account that Facebook canvas and mobile games pull from. Similar to how it works within Facebook, users without an existing balance of Credits will be able to purchase a bundle within the payment flow.

Unlike on Facebook where Credits are the exclusive payment method for games, GameHouse may still offer other payment options. However, Ian Fliflet who handles corporate strategy for GameHouse tells me that those signed in through Facebook won’t see the option to pay with a credit card or PayPal account. This could anger some long-time GameHouse users that try signing in through Facebook for the first time only to find their preferred payment options missing in the two test games. That in turn could negatively skew feedback on Credits for Websites.

If the test does indicate a demand for Credits as a payment option outside of Facebook.com, its unclear whether Facebook would require developers to use its virtual currency exclusively. It could simply make them an additional payment option, the way Credits currently work for Facebook.com apps as well as mobile apps and games. However, it might extend this test model so that sites that want to use Facebook as an identity and login provider will also need to use its taxed virtual currency.

The impact of Facebook Credits for Websites could be significant. It could assist independent game developers and digital media merchants with monetization, as customers might be able to quick make purchases rather than having time to reconsider while enduring the friction of entering their credit card information or logging in to PayPal.

Currently, many independent game developers have to distribute through portals like GameHouse that have built a base of users that have already provided their credit card details. Facebook Credits for Websites could give them the opportunity to distribute directly to fans in way that gives them more control over branding. The tax that third-party game portals take on credit card or PayPal transactions may vary widely, so Facebook’s 30% cut could be less or more than developers are used to paying.

Facebook has much to gain from Credits for Websites, though. The more places they’re accepted, the more users that are likely to buy and maintain a balance of Credits, and the more transactions Facebook will get a cut of. A user might buy a bundle of Credits to spend them on a gaming portal or to buy a band’s album, but then spend then become a paying customer of a freemium game on Facebook.com.

More users maintaining a balance of Credits also makes Facebook a more lucrative platform for developers. Typically only a few percent of gamers ever pay to play, but if they already have a balance they may be more likely to spend. Facebook may need to initially reduce its tax or not demand any exclusivity as a payment method to get websites hooked on Credits. With time, though, Facebook Credits for Websites could become a significant revenue source and powerful way to attract developers.

Facebook Makes Its Move: Brings Viral Channels to HTML5, iOS Apps

Facebook finally unveiled its long-awaited effort to help mobile developers market their native and HTML5-based apps through its platform today. iOS developers will get to take advantage of bookmarks, requests and the news feed in the same way that Facebook canvas developers do.

The interesting parts of today’s launch are:

Facebook is playing nice with Apple on viral distribution for native iOS apps, not just HTML5-based ones: If a developer wants to distribute a native application, Facebook’s notifications will send users to the iTunes app store.

So Facebook is not pressuring developers to build HTML5 apps in order to use its viral channels. This is a big deal because it means Facebook’s mobile platform will have greater adoption by iOS developers who don’t want to split their limited resources between developing natively and on HTML5. While promising, HTML5 apps still have a noticeable performance disparity compared to native iOS applications. It’s especially pronounced with games, which are the largest revenue driver on both platforms.

It’s unclear if Facebook will get affiliate revenue for the downloads it drives like other mobile-social gaming networks such as GREE’s OpenFeint do.

Parallel viral channels on Android will be coming soon. There’s no official date though.

Facebook Credits have arrived for mobile web apps (as was widely anticipated): HTML5 developers that want to use Credits as their payment mechanism must use it exclusively. Native iOS apps have to use Apple’s payment system, however. This split in payments between web-based and native apps is expected given that Apple is unlikely to give up revenue from in-app payments and paid downloads.

We were the first to report that Facebook might use an HTML5 platform as a way to extend Credits to mobile back in February, four months before any mainstream outlets wrote about it. And we also correctly reported the launch date as three weeks away from f8 while other blogs incorrectly said this would launch last week at Apple’s event.

And here are the key viral channels for mobile developers:

Requests: This may be the most effective new viral channel for iOS developers launching today. If a user gets a request from a friend to join an app, they can respond to it from their iPhone. Then they’ll be sent to either the app’s mobile website or to the iTunes store where they can download the native version.

News Feed: Users can click on news feed items and be directed to the HTML5-based app or the iTunes store, where they’ll be able to download the native version.

Bookmarks: Like on the web, users will get to save bookmarks to app they use. If users tap on a bookmark, Facebook’s iPhone or iPad app will launch the app if it’s installed or they will send the user to the iTunes store. (Given that bookmarks are already buried one layer deep in the Facebook app, we suspect users might be more inclined to launch apps directly from their phone.)

Understanding the iOS and Android Market in China

China is fast-becoming the second-largest market in terms of downloads for many developers including companies like Rovio, but it lags behind in terms of monetization. The country came in just behind the U.S. in page views on Google’s AdMob advertising network in July, according to statistics the network shared at an iOS developer conference in China this past weekend.

The promise is there, but how do mobile developers take advantage of it?

Over the past two weeks in Beijing and Shanghai, I’ve had the chance to talk with several mobile developers like High Noon-maker Happylatte, PapayaMobile, PopCap Games and other companies being incubated in former Google China head Kai-Fu Lee’s incubator Innovation Works.

It’s an incredibly complex and different market from the U.S., but here are a few insights into developing and marketing iOS and Android apps there:

1) Android may be the long-term bet, but iOS is showing surprising resilience in spite of lower incomes here: 

iOS has leapt up the ranks of mobile search referrals to Baidu in recent months and sends more queries to the Chinese search engine than Android does, according to a source at the search company familiar with the data. Google’s AdMob also said that close to three-fourths of the pageviews on its network in China are from iOS as compared to Android during the same presentation that the picture at the top is from. Nokia is still the biggest platform in China though.

There aren’t good public estimates available on the actual number of consumers carrying Android and iOS devices considering that there are many “Shanzhai” or knock-off phones that are based on Android but are incompatible with the platform. Plus, many people bring phones into the country through relatives and friends abroad. The country’s largest carrier China Mobile — which doesn’t even sell the iPhonesaid it had 7.44 million iPhones on its network in its last quarterly earnings call.

Dianxin, one of the makers of a local variant of Android known as Tapas, estimates there are 12 to 15 million Android devices currently circulating in the country. Many other local mobile-focused companies like PapayaMobile say they’re building products assuming there are at least 10 million iOS and 10 million Android phones circulating in the country.

An unlocked iPhone 4 costs 4,999 renminbi here, or roughly $780, well above its American price and even farther above the discounted price with a two-year plan that most U.S. consumers choose. That is about twice what the average new Android phone from Samsung, Motorola or HTC retails for at 2300 to 2600 renminbi or $360 to $410, according to China-focused research firm ZDC. Most people buy their phones unlocked — and often at full retail price — then pick a carrier afterward.

Apple is an incredibly revered brand in China. Based on observation, it’s hard to say there is a more potent and accessible status symbol for Chinese consumers with newfound discretionary income than the iPhone. There is a reason there are fake Apple stores here. There is a reason why Apple’s newly appointed chief executive Tim Cook said in the company’s last earnings call that China brought in $3.8 billion in revenue in the most recent quarter and $8.8 billion in revenue in the fiscal year to date.

Apple has also gotten away with a lot more than many other Western consumer technology companies which have come here only to fall flat on their faces. Unlike Google, Apple maintains a favorable relationship with the Chinese government. It likely censors sensitive content from the local version of the app store to comply with the Chinese government’s restrictions. Google doesn’t support paid apps in Android Market in China and unless it censors its store (which would require substantial changes to the store’s current review process), it would be hard for it to gain mass adoption here. In that case, alternative Android app stores may thrive.

2) There are many local variants of Android, but none of them are really that big — yet.

Unlike many other Western markets, there are several custom versions of Android here that are tailored to the needs of Chinese consumers (or in less promising cases, the needs of Chinese carriers and OEMs). Because the Android market here is still so new, most Android users still have the standard version of Google’s OS.

“None of them are really big right now,” said Si Shen, the chief executive of Android mobile-social gaming network PapayaMobile.

Don’t worry about them for now. But if you are interested, the handful that come up most often in conversation are:

> Continue reading on Inside Mobile Apps.

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