Earlier this month Facebook rolled out a new feature for its games that could breathe new life into companies like Zynga.It added in-game subscriptions, allowing Facebook game developers to charge users a recurring fee for games.
Subscriptions either reward players on a regular basis with extra in-game currency or other tools that give them an edge in play, or simply grant them access to advanced levels.
Previously, game developers made money two ways: through advertising and through in-game purchases, a business model that Zynga had seemingly perfected before its fall from Wall Street grace.
That business model has seemingly run its course. A small number of “whales,” or big spenders, bring all the profits, while a vast number of players never spend money.
This new revenue stream could solve a number of problems:
- If subscription games are designed right, more users will pay and keep playing. A subscription is less annoying than constant nudges to pay small amounts. Most game experiences will still be free, but subscriptions will hopefully have broader appeal.
- Subscription revenue tends to be predictable. Wall Street will like that.
- Subscriptions bridge Web and mobile. A subscription can work across platforms, making worries about monetizing mobile irrelevant. (Think of how LinkedIn benefits from serving its paid subscribers, whether they access the service on the Web, smartphones, or tablets.)
So the big question is who’s going to nail the formula for subscription games. Is it Zynga, EA, or Disney? An upstart like Kixeye?
Our bet’s on Amazon, which recently launched its first Facebook game. Here’s why.
A source tells us that the architect of Facebook’s new subscriptions feature didn’t even work there. A former Playdom employee named Pilarina Estrada came up with the idea. She just left to join Amazon.com. (Inside Social Games apparently heard something similar.)
An Amazon spokesperson did not respond to repeated requests for comment on Estrada’s hire or her role at the company. We also asked a Facebook rep to comment on Estrada’s role in helping Facebook develop its subscriptions feature and haven’t heard back.
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