Archive for the ‘Facebook’ Category

Facebook’s New Roadmap: A Business Model Dilemma?

Puzzled!With its Platform Roadmap announcement on Wednesday and judging by the headlines, Facebook seems to have launched its own version of a H1N1 crisis in the application development community.

Though under the auspices of giving app developers “new ways to attract and engage” users, Facebook has actually taken away the tools they have most relied on to grow their user-bases: status updates and notifications. In exchange, access to email addresses and the Inbox have been introduced through the API – virtually eliminating the viral one-to-many communication that has been essential to the success of gaming and other app developers.  As the success of social gaming companies is as much about stickiness and retention as it is about viral marketing, I’m not subscribing to the call for a crisis. With respect to Facebook’s strategy though, a few inquisitive considerations are in order:

Is this about improving the user experience? Nah, I don’t buy it. It was already easy enough to “Hide” updates from games and third party apps. Plus, has anyone figured out what qualifies a status update as a “News Feed”?

Is this about Facebook wanting a piece of the gaming success? Absolutely. By eliminating the viral marketing tools that have been vital to user acquisition, Facebook is basically pushing app developers towards promoting via paid advertising.

Does Facebook have a business model dilemma? Advertising has been the primary business strategy to date, one that’s worth in excess of $500M in 2009. With the micro-payments for virtual goods market set to clear $1B in 2009 in the US alone, and with the astounding success of social gaming companies on Facebook – shouldn’t Facebook try to capitalize on its applications platform position by introducing a micro-payments solution of its own rather than stifle the growth of these companies to maximize ad revenue?