This afternoon I was having a discussion with a leading app developer about the future of virtual goods on the Facebook Platform. One thing that came up during the discussion was the idea of a centralized virtual goods system on Facebook. It’s something that I first described when Facebook announced that they were killing the gift shop next month, however it has increasingly become a center of focus for me personally. With all these applications selling virtual goods, why isn’t their an easier way to show off the goods that we’ve purchased?
With Facebook ramping up their Credits product, it’s not completely ridiculous that the company would kill off their gifts product, however the core idea was pretty smart: let people purchase virtual goods as well as receive those virtual goods as gifts from friends and show them off in their profile. The tie between virtual goods and identity is a critical component of any burgeoning virtual goods ecosystem. Somehow, Facebook has a massive virtual goods ecosystem without this key association (the one between virtual goods and identity), however I don’t believe this is sustainable.
The main flaw with the existing system is that when a user stops playing a game (like FarmVille for example), the virtual goods from that game do not transfer anywhere. In other words, all the money that was spent (which will soon be Facebook Credits) ends up being money that was spent on content that was not retained and had no lasting value. Tied in as part of the Facebook profile, those virtual goods can be saved forever. Most obvious is that virtual goods serve as digital artifacts that form a core component of an individual’s online identity.
Given that Facebook profiles serve as the primary representation of an individual’s digital identity, it’s only logical that virtual goods would become integrated and allow the application experience to live on, once the application is gone. This would not only increase the volume of transactions to take place with Facebook Credits, but it would also benefit the entire ecosystem. According to people I’ve spoken to, this concept is something that Sean Parker has personally pressed for, as well as other execs, however Mark Zuckerberg is not as big of a fan of the concept.
However the internal political debate is playing out isn’t really that relevant though. The main point is this: Facebook must provide some sort of central archive for individual virtual goods within the profile to help further the virtual goods ecosystem and accelerate usage of Facebook Credits, something the company is currently focused heavily on.
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This doesn't particularly make sense. Most people find the idea of spending money on games foolish to begin with, and unless you either have no friends who think so, or you want to invite a stream of criticism about your spending habits, there's no reason to show off your virtual goods.
Quite frankly, if you like farmville, okay, whatever, it's a stupid game. However, if you're showing off "OMG I BOUGHT A MAGIC SHEEP FOR $12!", now you've gone from weird to lame.
There doesn't exist a parity between online virtual goods and the offline counter part, and most things that people show off offline have some inherent "oh, that's cool" value. The artwork on FB games has no such potential.
What's more, it's already quite possible for you to take pictures in most games if you DO want to show off your acquired goods, and post them to a folder for everyone to see. As that functionality is more than readily in the game, and yet vastly underused for this purpose, there's an obvious, massive flaw in the logic presented here.
Nobody posts "Look at my most awesome new purchase in Farmville" and expects anyone to take them seriously. Unless that changes, this is beyond a bad idea–it potentially could kill what economy there is by making people feel regret and embarrassment about their collection of magic sheep and virtual hotdogs. If the whole world is going to know you spent $12 on something that would take 3 days to get for free if you had any cooperative friends, you're not going to be happy to advertise that fact.
Comment by mmm — July 28, 2010 @ 11:45 pm
Excellent point Nick, and almost no one out there understands this concept…that the purchase and display of virtual goods in social media allows consumers to create an identity and show others who they are through this consumer identity.
Comment by cassidy conner — July 31, 2010 @ 12:06 pm
I agree with 'mmm' for the most part on this one. I don't think it's desirable to show off items purchased in a silly Facebook game. Micro-transactions in Facebook are stuck in the phase of "I thought of you so I bought you something cheap, completely worthless, and easily copied" as an expression of affection and it's going to take a while to come out of it. Virtual goods in games only have value if they take time to acquire. They only retain value if they are limited in distribution and they only gain value from their demand (i.e. utility or uniqueness). If the magic sheep really does increase your ability in the game and its distribution is limited, I could see where this could hold some kind of value and pride. However, you can't expect value from something strictly because it was purchased for some amount. Value is an effect of demand, ESPECIALLY in the realm of virtual goods.
On to your point, you make the assumption that value of virtual goods should be retained from a game after you quit playing it. Which hardly makes sense because the value of the virtual good is only relevant in that particular game. It sounds like you're suggesting some kind of global achievements system for Facebook games. It's no surprise Mark Z. wouldn't be a fan of it. To come up with some kind of equality scheme between all games and their achievements would be a massive headache. The purpose of micro-transactions in Facebook games is for developers to squeeze out as much expendable income from these "casual gamers" as possible. Until something novel comes about that puts real world value on virtual goods, I don't see Facebook investing the resources to make a system where all game developers check with a central core to establish global value of all in-game items.
Comment by $12 magic sheep — July 31, 2010 @ 4:11 pm
Excllent point by "mmm" on this. Disclaimer before proceeding – my company is involved in the VG/microtransactions space.
One of the biggest drivers is to advance in level quickly enough to be able to compete with friends who play more often. The buyers are buying connectedness, in a way. Here's an example: grandparents who log on to MMOs to spend play time with their grandkids. Incidentally we're seeing a massive growth in what we call the "grandma segment". we believe because many families have displaced to find work in other areas of the country. FB can't really capture it, because no such dynamic exists for them – it's all vanity. We've found the most successful publishers of microtransaction games appeal to both vanity and gameplay benefits. Picking one is not enough.
In that context, it's easy to see why FB would be lukewarmly interested at best: the progression benefits are nil, and credits is the lowhanging target. It's not just easier to facilitate coins – payment and currency are where a big chunk of the money is. No brainer.
Comment by Eric — August 3, 2010 @ 10:43 am