There’s Micropayments in Them Games

Spare Change, the self-described “first and largest micro-payments system for social networks” will be acquired by PlaySpan, which monetizes virtual worlds, online games, and social networks and gonna be a micro-transaction party.

While the acquisition may seem to be an odd move since the companies are processing around $80 million in combined transactions, the truth is the market is much bigger than the two of them combined.

To understand why this is a smart move, consider several related market news items:

  • iTunes apps store records 1 billionth download
  • Habbo records $74 million in real revenues
  • Chinese Internet giant, Tencent makes nearly $800 million on virtual goods (see Internet value added services line)
  • EA’s free video games pull in > $1.6 million a month in microtransactions

With that much money moving around, how do micropayment startups like PlaySpan and Spare Change compete? By pooling interest and leveraging each other’s strengths.

So money can be made, no, is being made in social networks, games, online, and mobile – all places where PlaySpan and Spare Change do have a shot. And now, with their resources combined, they have a better shot at competing.

Having virtual goods does not equal micropayments, nor does having one, the other, or both guarantee any success. The question is can PlaySpan continue to capitalize on people’s interests in virtual goods/games? The key is, as with each of success cases above, the virtual good, game or service provided must be one people are willing to pay for.  This is how companies like PlaySpan can cash in by facilitating the transactions for the virtual good, game or service and capitalize on this growing market.

About Duane Kuroda

Business ninja, deal hunter, Internet marketer, and technology fiddler obsessed about growing companies and launching products. Currently at Peerspin, Duane’s past lives include Vice President of Marketing roles at companies leading micropayments, Internet video, and online communities as well as research and consulting for mobile advertising. Duane has spoken at conferences including Digital Hollywood and Digital Video Expo on topics covering monetizing online content and online video, has appeared on TechNowTV and KNTV, and has been quoted in various magazines. Follow Duane on Twitter: @dkuroda.

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