Facebook expands its virtual economy

Facebook has announced a partnership with Malaysian payment company MOL which will allow Facebook’s virtual currency to be sold in over 500,000 retail outlets across southern Asia, Australia and New Zealand.

• Facebook has announced a partnership with Malaysian company MOL: Facebook’s joint venture with the electronics payments company will allow the social network to sell its own Facebook credits at retail stores across Asia and Australasia

• Facebook credits are currently used to buy virtual items on the social network: Users of Facebook applications can use the virtual currency to buy various virtual items or game points

• The move will facilitate offline purchases of credits in the region: The partnership will see Facebook credits available across MOL’s 500,000 strong network of retail outlets in the region. Consumers will be able to purchase prepaid credits for popular applications like Farmville and Mafia Wars. The virtual credits usually allow users to customise avatars, gain an advantage in competitive gameplay or achieve a game objective in a shorter period of time

• The partnership aims at targeting those reluctant to use credit cards to purchase credits: According to a statement by MOL, consumers in the region rely “heavily on offline prepaid cards rather than credit cards to purchase digital goods and services”

Our analysis shows that experts are strongly supportive of the partnership. They believe virtual currency has a large potential for ongoing growth in the region. They add that the simplicity and unified nature of the new system is likely to generate significant revenue streams for Facebook. However, some doubt the global reach of the new venture, with virtual currency less prominent in Europe and the US. 

Analysis shows that experts believe credits have potential for growth and will generate significant revenue for Facebook:

• Experts believe the credits system has potential for growth:  Experts comment that Facebook’s virtual economy is a “significant growing market” and is “fundamental” to the company’s long-term plans

• Professionals say the scheme is likely to generate considerable revenue for the site: With Facebook taking a 30% share of all purchased credits, experts believe the credits will provide a “boost” to the network’s revenue streams

• Some professionals are sceptical over whether the scheme has global reach: Experts comment that MOL only features in Asia and Australasia. They say the potential for the growth of offline credit sales may be “confined” to this region

• Experts see the new system as simplified and unified: Professionals point out that the move “eliminates the frustration” of entering payment details repeatedly for each application and removes the need for a credit card. Experts point out that Facebook credits are likely to become the “dominant” virtual currency within the market, thereby unifying a market full of mutually exclusive virtual currencies