This story has been doing the rounds for a while but it seems that Facebook is taking on both the Apple App store and Google’s Market in the mobile and smartphone marketplace, and the launch may be imminent.
Technically, the problem for Facebook has been a lack of presence in the mobile space ie no specific app for iPhones and iPads that would then allow them to capitalise on mobile spending eg in-game and in-app purchases. All revenue went to the handset OS manufacturers – that is, Google and Apple, with Facebook missing out on its share. The big problem has been the use of Flash in games and apps on FB (which does not work on iPhones) and the lack of a mobile app to add an FB ‘skin’ to in order to suit iPhone users. This would then help them spend their money through Facebook credits.
It seems that a project at Facebook called Spartan may have been set up to resolve this issue for FB and that the end is nigh! However, FB has taken Spartan down an interesting route by basing the solution on HTML5 and hence within Apple’s very own browser – Safari, which is resident on every iPhone and iPad.
Facebook Credits – the virtual currency which FB insisted all virtual goods must be sold for earlier this year – is the key to the potential success of this strategy, and for anyone who is in the virtual goods market, FB’s entrance in to this market place gives yet another route to customers. Developing a community of apps that will operate from within Facebook could unlock revenue streams that FB has to date been unable to access and take them beyond advertising being the major source of revenue.
Obviously, we do not all sell virtual goods such as items for farms, or cheese for Mousehunting, but there are major brands who have jumped on to the virtual goods bandwagon in order to create new revenue streams and markets, and it is a growing market. Offering a free game that then requires money to be spent to advance is a not so novel branding mechanism now, and it seems that brand loyal consumers are as willing to spend hard earned cash in this way as to buy an actual product.
One can see how this virtual goods element could become important to brands and businesses, especially those who have realised the income potential within the social and mobile worlds. We are already seeing mobile payments for actual goods coming into play and for those who want to make micro payments for goods in vending machines etc, having all of this accessible from within a single FB Credit account may prove attractive.
However, it goes far beyond this in that FB has a keen community of developers already, and challenging the apps market without losing the 30% share has been one of the problems facing those who are ensconced in the FB space.
HTML5 may prove to be a further death knell for Flash, which has been the bane of Apple for quite some time, although it has kept app developers on their toes working around it. The Android success may have something to do with its ability to work with Flash, but it is hard to ignore the popularity of the iPad and think that Facebook are being a tad canny in going out to the browser for the solution rather than struggling within the OS.
Companies looking to keep ahead of their competitors would do well to hold a brainstorm about virtual goods over the coming months……