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Virtual goods starting to pan out for Facebook game app developers, and not just the venture-funded ones

Eric Eldon, VentureBeat07.23.2008
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Like grizzled miners panning for gold on a river high in the Sierras, Facebook applications developers have been toiling away, trying to figure out how to make money from the millions of people who use their apps every day. Those developers who focus on games are starting to find gold — by which I mean revenue gained from doing things like selling virtual goods in exchange for real money.

Various estimates given to me by developers themselves and other sources peg some applications as making hundreds of thousands of dollars a month — this is money that a connected investor tells me Facebook itself isn’t even fully aware of. A few apps below are notably profitable, and these are self-funded small teams, not large, venture-backed companies.

One of the first to really start hitting pay dirt, I hear from various developers, is (fluff)friends — a game reminiscent of the Japanese Tamagochi digital pets that you need to care for to prevent from virtually dying. In (fluff)friends, you choose a free virtual pet (or buy a fancier one) and display it on your profile page, let your friends pet it, feed it with virtual treats, enter it into virtual races, and adopt mini pets to keep it company — and a lot more, but you get the picture. You start caring about a cute virtual animal and all the things you can do with it, and pretty soon you whip out your credit card so you can buy it those virtual treats to make it grow virtually strong for the big virtual race. (This game is addicting for some personality types, but sadly not mine. See screenshot.)

The application has 112,229 daily active users now; note that this metric fluctuates based on time of day, week, month and season). Co-founder Mike Sego, a Google engineer currently on leave to focus on the application, isn’t giving me any revenue numbers, except to say that the app makes more than a dollar per month per daily active users. That means somewhere in the low six digits, at least. Also, a fraction of the app’s paying users, he says, are spending hundreds or even thousands on their pets.

Sego adds that all this talk of money-making virtual goods is “old news” to the Facebook application developer community. Indeed, other applications are also making these sorts of revenue figures, other sources tell me, including (lil) Green Patch (nurture virtual plants to help raise money to fight global warming; 745,630 daily active users) and Mob Wars (be a virtual mobster; 483,824 daily active users).



Specifically, one source tells me Mob Wars is projecting it will make $15 million in the next twelve months, although its developers haven’t gotten back to me to confirm. Another company, Friends For Sale! (buy and sell your friends, virtually; 656,396 daily active users) has told me that it doesn’t plan to make money on regular old banner ads, even though it recently raised a venture round. While it won’t tell me more, I’ve separately heard that it’s making money through its virtual friend-purchasing currency.

Friends for Sale — as well as (fluff)friends, (lil) Green Patch and other game-oriented apps — use the services of companies like Offerpal and Peanut Labs to reward users with virtual currency dollars in games in exchange for taking surveys. It’s a


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