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Facebook, Zynga Sign Long-Term Virtual Currency Deal 124

Posted by Soulskill
from the money-builds-great-friendships dept.
Despite recent rumors that Facebook and FarmVille developer Zynga were gearing up for a legal battle, the two announced yesterday that they have signed a five-year agreement over how virtual currency will be used. Quoting: "The source of the conflict ... comes down to Facebook's decision to introduce Facebook Credits, an over-arching currency system to be used in all games on its platform. This allows users to purchase just one type of currency for use in Facebook games, rather than buying directly from individual developers — a lack of direct control over its monetization that became a major point of contention for Zynga. Also likely an issue is Facebook's decision to take 30 percent of revenues gathered from credits, with 70 percent allocated to the developers."
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Facebook, Zynga Sign Long-Term Virtual Currency Deal

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  • Re:Whoa morons. (Score:3, Informative)

    by KDR_11k (778916) on Wednesday May 19, 2010 @05:46AM (#32262818)

    That's the rate online game stores (Steam, XBLA, etc) tend to charge. It's their cut as the retailer of the game, for providing the infrastructure, advertising, etc that their service offers and many people accept that trade-off. For comparison, I believe the indie license for the Unreal Engine is something like 50% of your revenue.

    Farmville cannot separate from Facebook, it requires the social propagation system it has on Facebook where Farmville players effectively spam their friends with advertising for the game.

  • by Mouldy (1322581) on Wednesday May 19, 2010 @06:20AM (#32263020)
    Buying virtual currency is no different to buying credit tokens in an old-fashioned arcade. It's no different to buying chips at a casino. It's not quite the 'scam' you claim it to be.

    Social games need their user's money to survive. Companies won't (and can't) make games for free. The traditional "you buy a game, then you play the game" business model doesn't work on social networks. People are used to games on the web being free. So the only way to make money from the free games is to offer special content that you have to part with real money for. Social games companies now have a "you play the game, then you buy stuff to play the game more/better" business model because it works. Facebook already make a lot of money off the back of 3rd party app developers. Do you think so many people would stick around on facebook if there weren't games to idly pass the time? Of course not. The apps keep people on facebook for longer, giving facebook more ad-time. Asking 30% of developers only source of income is very cheeky in my opinion.

    How/why I know what I do;
    I work for a games company, and I develop most of the company's social games (with other people, of course). Trust me when I say it's very expensive to not only develop and host the games - but to keep them working. Facebook & other social networks move their goal posts a LOT. We have to be on top of all their changes so our games keep working. Unlike console games, for example, we can't just release a social game and leave it.
  • by ledow (319597) on Wednesday May 19, 2010 @07:01AM (#32263242) Homepage

    A currency, by definition, exists only in the mind of the users anyway. The £10 note I have in my pocket is only worth £10 because people will happily exchange it for goods / services / other notes to a value of £10. If there's a nuclear war, it'll be worth ABSOLUTELY NOTHING if I survive that. A few tons of food, a working car, or a nugget of gold, on the other hand... and even the last one is questionable that it would have value until civilisaton was rebuilt.

    When Zimbabwe's currency became almost valueless and therefore useless because nobody wanted to accept Zimbabwe dollars (or whatever they were called), the currency was abandoned and people used dollars because other people would *happily* accept dollars. It was still a legal tender, but it was useless because nobody was willing to accept it for the value it purported to hold.

    My £10 note also holds a peculiar legal status as it is only a promisary note to the value of £10. It says on it "I promise to pay the bearer, on demand, the sum of £10", and it's signed by the "Governor and Company of the Bank of England". Other notes in other countries have similar legal status. If I go to Scotland (technically the same country, because they are both in the UK), I stand a good chance of being given a similar note by the Bank of Scotland in my change. Both are legal, have identical "values" as they have agreed to track the Bank of England values - but try getting a London cabbie to take one. It's still just a piece of paper, at the end of the day, that costs WAY less than £10 for the government to fabricate. The same for coins.

    A cheque has similar legal status. It's "virtual" in that the currency doesn't actually exist in a tangible form. But each time I write one, that's a binding legal contract to give someone something of that value. In the past, cheques have been deemed legal when they were written on a cow. The Bank had a legal requirement to accept it as a binding contract at the time.

    Historically, when coins actually started to be worth more than their face value, they were melted down and sold to people for more money than they represented. Any currency is only a representation, or a promise, of the value written on it. Sometimes that promise means nothing.

    With a "digital" currency, the situation is no different. No "money" changes hands when I buy something from Amazon, just a number goes from one box to another on some computer somewhere. So credit cards and bank accounts are no different to a virtual currency at all, because they only exist as a number... the plastic card is merely a convenient security device / container for that number. If my country dive-bombs economically, it might well be the case that international sellers refuse to acknowledge that my money transfer is worth as much as I say it is. It's all based on a perception of value.

    Thus, all currencies are by definition "virtual".

    Therefore, if I choose to exchange my "real" money for some "virtual" money, it's no worse than putting it into my bank account. In fact, I do this every day - I buy petrol and I'm given "loyalty points" which I can cash in to claim, say, a cut-glass goblet or a breakfast bowl at a later date. And people buy entirely "virtual" products every day - the games on my Steam list, the account for my mobile phone, the subscriptions to websites, I don't see any "tangible" product at the end of a day, just the result of a bit flipping somewhere on some distant server, but it still has value to me.

    Facebook's plans are no different at all, nor are some MMORPG's "gold", or an LWN.net subscription, etc. - they're the same as every other "virtual" currency / purchase out there (which is why Beenz and Paypal were often under investigation under various banking laws - they were, in effect, banks).

    If people *want* to pay "real" currency for some game tokens of some kind, then they believe they are going to get value from those tokens. It's no different to going to

  • Re:Whoa morons. (Score:2, Informative)

    by magus_melchior (262681) on Wednesday May 19, 2010 @11:46AM (#32266752) Journal

    30% ? what kind of whacked out rate is that ? loansharks' ?

    It's about the rate of a very high APR credit card. Payday lenders and the like can have effective rates that are in excess of 100%-- they'll never admit as much, because they use several accounting tricks to wring more money out of the people they loan money to.

    And the next thing you know, Facebook will spin this as, "See? We're not as bad as payday lenders." *facepalm*

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