There's Real Money In Facebook Apps

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Back when Facebook first announced its applications platform in June 2007, a reporter asked Hot Or Not cofounder James Hong why he wasn’t attending the All Things D conference that year.

“I’m too busy working on Facebook apps,” answered Hong. “It’s the new Internet.”

A year later, that kind of hype looked silly in retrospect. Facebook had begun cloning popular apps and implementing severe rules on how developers could use its platform to attract new users. If any apps were making money it was by sending other apps new users. A frustrated executive working for one of the more popular app-makers told me it would be “insane” for a new developer to start building on the Facebook platform. Soon came the sudden success of the iTunes/iPhone app platform and the hype found a new home.

But now, in the post-hype haze, it’s beginning to look like the Facebook applications platform might be a place for real businesses to grow, after all.

The evidence:

  • San Francisco-based casual games maker Zynga will crack nine-figures selling virtual goods on Facebook and elsewhere in 2009.
  • Building apps for brand advertisers, New York-based startup Buddy Media will grow its revenues 300% in 2009, getting to 8 figures and becoming profitable “in the very near term,” according to CEO Mike Lazerow.
  • There’s a battle for talent. Social games startup Playdom has hired 23 new employees over the past two months, including former Zynga designer Dave Rohrl.
  • The investment keeps coming. VCs including firms like Draper Fisher Jurvestson poured a total of $21 million into social games-makers OMGPOP, SuperSecret, RotoHog and Blade Games World before March of this year.
  • Facebook is investing in two products to tap into app-maker revenues, a payments platform and an ad network built on the back of Facebook Connect.

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