Facebook Inc. is tapping virtual farmers, Mafia dons and online pets to generate cash from the social-networking website’s 300 million users.
The company is testing a payment system to gain a cut each time an online-game player buys a digital tractor, weapon or hat on the site.
That would give Facebook a piece of the hundreds of millions of dollars that are being pulled in by Zynga Inc., creator of “Farmville” and “Mafia Wars,” and Playfish Inc., maker of “Pet Society.”
The social-games market will almost triple to $2 billion by 2012, estimates ThinkEquity LLC.
“Virtual goods and microtransactions, especially inside games, can be a very big and thriving business,” said Ethan Beard, who runs the developer network at Palo Alto, Calif.-based Facebook. “Two years ago, we never considered it.”
Zynga and Playfish, which both started in 2007, offer free-to-play titles and sell virtual goods to users through so-called microtransactions. Facebook Credits, a payment service being tested by six outside developers, can become the “dominant payment method” on the site, where $1 billion in game-related goods and services will trade annually in three years, estimates Atul Bagga, an analyst with ThinkEquity in San Francisco.
“If you buy credits on ‘Mafia Wars,’ that credit is only usable in that game,” said Bagga. “But if you buy 20 credits on Facebook, now you can apply those credits wherever.”
PayPal, the online payment system owned by San Jose, Calif.-based eBay Inc., charges 5 percent plus 5 cents for each microtransaction. Assuming a similar rate at Facebook and Bagga’s $1 billion estimate for transactions at the site, the company could reap $55 million from the service by 2012. That figure represents more than 10 percent of current revenue.
Facebook, which turned profitable in the second quarter, expects more than $500 million in sales this year, according to Marc Andreessen, a board member.
For now, outside game developers are making most of the money. Zynga, which is testing Facebook Credits in one of its games, sells virtual goods in games and lets players pay to advance their positions. In the company’s “Farmville,” for example, more than 60 million players harvest crops, raise animals and buy materials.
Zynga expects revenue to exceed $100 million this year.
