Facebook wants to improve on social games in 2012

Facebook wants to use its Open Graph make it easier for people to build social games, particularly in the mobile space.

The social network may, however, have to do a little more to convince developers disgruntled by the low conversion rate from free to paid users.

At the Inside Social Apps 2012 conference in San Francisco director of product management at Facebook Carl Sjogreen spoke about the social network’s desire to make it easier for people to build cross-platform apps.

“If you are building a social application…it’s really important to think about cross-platform,” he said.

Previously, said Sjorgreen, “You sort of had to have a PhD in Facebook to build an app on Facebook.”

Facebook also seems keen to integrate its social gaming into its Timeline platform. According to Mashable, Sjorgreen said he wanted to create a gaming experience “without interruptions and many opportunities to share”.

The social network may, however, need to convince developers that the new system will help them make money after disappointing returns from Facebook’s in-house monetisation system Facebook Credits.

At the same conference, a number developers complained that the conversion rates they were seeing from Facebook weren’t high enough to offset the 30% revenue they have to hand over to Facebook.

According to Inside Social Games,Kabam Chief Executive Kevin Chou:

We thought that conversions would go up and be around 15 percent or 20 percent, but it turned out to be around 5 percent to 10 percent, meaning that we’re taking a 20 percent net tax.

Co-founder of Crime City developer Funzio Anil Dharni, meanwhile, expressed a general sense of despondency at the returns his company had received from Facebook Credits:

Facebook Credits is a wash for us. It increased the conversion rate, but we actually saw a gradual decrease in average revenue per paying user. It’s hard to know why.

Social games are an incredibly important source of income for Facebook. Its filing with the Securities and Exchange Commission (SEC) revealed that it makes around 12% of its revenue from industry leader Zynga.

A large part of that revenue comes from an exclusivity deal between the two. What this deal boils down to, essentially, is the fact that the two companies have to try to pad each other’s user bases on a quarterly basis:

The parties acknowledge that FB desires to enable Zynga to build the Zynga Platform on top of the Facebook Platform, and the parties desire to, amongst other goals set forth herein, work together to increase the number of users of each party’s products and services.

The parties further acknowledge that Zynga is making a significant commitment to the Facebook Platform (i.e., using Facebook as the exclusive Social Platform on the Zynga Properties and granting FB certain title exclusivities to Zynga games on the Facebook Platform).

In exchange for such commitment, the parties have committed to set certain growth targets for monthly unique users of Covered Zynga Games.

…Each month during the Term, for all Properties on which you implemented, during the previous month, the Facebook Ad Unit, we will pay you a percentage of Net Revenue (“Ad Share”) arising from such Properties for the previous month.



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