This is Where Facebook’s Revenue Growth is Going to Come From

Whether the Facebook IPO goes big or bust (hint, it’s going to go
big, for better or for worse), things are going to change for the social
giant. Zuckerberg maintains a controlling share, but little by little,
the be-
hoodied brass at Facebook is going to find that answering to
shareholders changes the way you do business. And that is going to mean
growth or bust.
It’s already becoming clear that while ads might be able to account
for some revenue growth, they aren’t the cash cow that some might be
hoping. E-commerce is problematic too.
Facebook, however, has one big bright spot. It’s an industry that
until a few years ago, barely existed. And it was born almost entirely
on their platform. Social games make big money, and as developers get
better at making them and customers get used to playing them, they’re
only going to get bigger. If Facebook is going to see the kind of
revenue growth that investors are interested in, social games are its
best bet.
Right now, social games are mostly discussed in relationship to Zynga, because Mark Pincus
still wears the social crown he crafted himself when Farmville came out
in 2008. But there are other developers out there – lots of them. It’s
hard to make any kind of predictions about the social space except one:
it’s just beginning.
I talked to Greg Borrud, CEO of Seismic Games,
makers of “Celebrity Me” and former head of production and Pandemic
Studios. Seismic Games aren’t the biggest name on Facebook, but
independent developers like them are going to start to develop a bigger
and bigger profile on Facebook. The social revolution happened with
Zynga at the head and Facebook in tow, but as the space matures Borrud
has seen much more maturity and support from the Facebook team.
“Games have led on Facebook, and Facebook has followed. But in the
last year, you’ve started to see a shift,” he says. “As they see this as
a real great return on investment, they’re going to focus more and more
on gaming support.”
Gaming also provides Facebook with the answer to its most vexing
problem yet: how to monetize mobile. Ads are hard to cram onto a phone
screen, but virtual goods work just as well. Draw Something is the first
mobile mega-hit to truly take advantage of the Facebook platform, but
it won’t be the last.
Facebook gaming could make it a platform that dwarfs Sony or Microsoft.
When investors look to a company, they want to see a blue ocean of
limitless growth – this is it. The gaming audience scoffs, but the time
will come when you can use Facebook to play with your friends on Call of
Duty. Or Diablo 3. And you will.
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