Google+ Seeks to Undercut Facebook on Games Fees
Google Aug. 11 began introducing 16 games on its Google+ social network, allowing users to play Angry Birds, Zynga Poker and 14 other titles by clicking a new games button in the social network's toolbar.
The lesser known detail is that Google will only take 5 percent of any payments made by Google+ users to game companies for the rest of the year. That percentage looks mighty fine compared to the 30 percent cut Facebook takes from its games developers who get paid from the Facebook Credit virtual currency system.
Some of Facebook's 200 million game players pay to buy virtual goods, such as tractors for the popular Zynga title FarmVille.
Virtual payments have become a huge revenue source. eMarketer claims social game creators made more than $500 million in sales in 2010.
Facebook has been the leading platform where social game specialists have made money. Google's lower fee may be attractive, but its chief dilemma now is scale.
Facebook has nearly 800 million users. At last count two weeks ago, Google+ had 25 million users. At Google+ current scaling rates, somewhere between 30 million and 40 million people now have a Google+ account.
There's clearly a big gulf in audience between Google+ and Facebook right now.
M2 Research analyst Billy Pidgeon believes Facebook needn't worry at this point because it has the majority of the audience with which to target its social games, as well as exclusive rights to offer Zynga's Farmville and Mafia Wars. "Google+ has a lot to prove when it comes to gaming," Pidgeon told eWEEK.
However, Pidgeon likes the Google+ Circles social graph construct for games, because it allows users to share game-specific information with only those users who might be interested in games. That stands in stark contrast to Facebook, where users felt pestered by News Feed updates about their friends gaming habits.
What Google also really needs to do now is promote the heck out of games. Altimeter Group analyst Jeremiah Owyang told eWEEK Google could call attention to its games by integrating then with and promoting on Google.com, Gmail, and search engine results pages.
Another issue to address is something of the chicken-and-egg question: Did Google launch games too early? Should have it have waited to have tens of millions more users before adding games? Neither Pidgeon nor Owyang think so.
"To me it would be smarter to test out games now because games can put a lot of stress on the servers," Pidgeon told eWEEK. "It's part of the stress testing and complexity testing that they have to do. I'm pleased that they started with games sooner rather than later."
Owyang believes the timing is right because developers have been seeking alternatives to Facebook's developer program, which has been at strain for some time.
"The more options developers have to spread their applications gives them new opportunity to monetize. No doubt the 5 percent rate is a loss leader strategy for Google to attract developers, and expect that they'll provide opportunity to integrate these games into other applications such as mobile as Google+ mobile application continues to grow.
Facebook apparently isn't taking Google+ lightly.
Within hours of Google unveiling games, Facebook spit out a few new features for its gamers. Users may expand the size of the window in which games are played on Facebook's site, create bookmarks for their favorite games and use a scrolling ticker that alerts users to their friends' game-playing status.