Early this month, Facebook (News - Alert) introduced in-game subscriptions as a new feature for its games. It allows Facebook game developers to charge users a recurring fee for games. This new feature could give social gaming companies, like Zynga (News - Alert), a new lease on life.
According to a report, subscriptions either reward players on a regular basis with extra in-game currency or give access to other tools that give them an edge in play, or simply grant them access to advanced levels.
Prior to in-game subscription, game developers made money two ways. These include advertising and in-game purchases, a business model that worked well for Zynga before its fall, wrote Thomas. The report indicates that such a model has reached its course. “A small number of "whales," or big spenders, bring all the profits, while a vast number of players never spend money,” wrote Thomas.
However, according to Business Insider report, the new revenue stream could solve a number of problems. For instance, if subscription games are designed right, more users will pay and keep playing. The report shows that a subscription is less annoying than constant nudges to pay small amounts. Though most game experiences will still be free, subscriptions will hopefully have broader appeal.
Likewise, subscription revenue tends to be predictable. Plus, subscriptions bridge Web and mobile. Because a subscription can work across platforms, it makes worries about monetizing mobile irrelevant, says the report.
However, the reporter asks the big question. Who is going to nail the formula for subscription games? Is it Zynga, EA, or Disney (News - Alert)? Or an upstart like, Kixeye?
But, Business Insider bet's on Amazon, which recently launched its first Facebook game. A source told Business Insider that the architect of Facebook's new subscriptions feature, Pilarina Estrada, came up with the idea. The report indicates that she recently left Playdom (News - Alert) to join Amazon.com. The report shows that Amazon’s strategy is to expand social gaming. And Estrada now works as head of products for Amazon's social game platform in San Francisco, Calif.
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Edited by Brooke Neuman