Facebook Moves to Quit Selling Virtual Birthday Cakes and Make Real Dough Instead

‘Fess up if you are among the curious who’ve coughed up a dollar or two to buy a virtual balloon or bouquet of flowers to send to a friend on Facebook. Did you continue paying Facebook for the privilege of sending a 100×100 pixel-sized gift to your friends? I didn’t think so.

It’s not surprising that Facebook just announced on Thursday that it’s candles out for its gift store, which it has operated since 2007.

According to InsideFacebook estimates, while the gift store revenue of $10 million a year or sub-$1 million a month isn’t  anything to write off, it might be considered laughable when you consider that the number of Facebook applications in the top 50 applications  make in excess of $100,000 per day, according to insiders in the application developer community.

The gift store could close its shutters for the last time as soon as August 1st, according to the CNET report.

No wonder it just announced a new partnership with Malaysia-based MOL Global, which specializes in payment solutions, to rollout multiple offline payment channels in Asia, according to a Canadian Press report.

Social media analysts might be scratching their heads since MOL also owns Friendster, a one-time social network rival to Facebook. In fact, I’ve overheard a couple of Friendster insiders bemoan at post-conference boozing sessions: “We could have been Facebook”.

In this age of “coopetition” it’s not uncommon to see strange bedfellows, as the Yahoo!-Microsoft strategic partnership has shown us. With the Facebook-MOL tie-up, the pro factors are much stronger than the cons in this case.

From having had a role in operating and marketing a number of popular Facebook applications, I’ve seen firsthand that Asia-based Facebook users tend to spend more time playing games and spend more money buying virtual items compared to their US and Europe counterparts. US Facebook users are especially keen on incent CPA offers, like mobile offers and submits, which the networks were only too happy to accommodate until TechCrunch decided to take up its “scamville crusade” last October.

In any case, this is a good deal for Asia Facebook game players. Teenagers will be able to top off their game credits by purchasing a game card at a 7-Eleven, which is an easier process than finding an adult with a PayPal account or credit card to add credits on their behalf.

Secondly, since many Asian Facebook users don’t have or aren’t able to apply for credit cards or a PayPal account, Facebook credits aren’t easily available to them. In some cases, users organize a “group buy” and transfer their funds to one of their countrymen or someone in the US with a credit card in order to add credits to their Facebook accounts. In the past some of the group buy organizers have absconded with thousands of dollars, so MOL stepping in as a trusted party helps reduce risk associated with playing the games.

MOL’s footprint will also help in Asian countries where “domestic credit cards” are issued, such as China. These credit cards are only usable within their home country because they’re not linked to an international credit card network like Amex, Visa, MasterCard or one of the other majors.

In this case, MOL could expand beyond just taking cash payment and include these domestic cards too.

The tie-up looks like a win-win situation for both Facebook and MOL and should increase the penetration and engagement rates of Facebook Apps, especially for Facebook users who’re only using it’s messaging and wall posting features now.


About Andrew Wee

You can find Andrew Wee on Twitter @andrewwee

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