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Table of Contents

Lead Story

Transportation payments in transition

News

Industry Update

Financial reform bill passes Senate, interchange targeted

Why won't Apple take cash for iPads?

PCI SSC unveils new PTS requirements

Trade Association News

Selling Prepaid

Prepaid in brief

Prepaid's role in monetizing social media

A new benefits option for Floridians

Views

The drive to innovate

Scott Henry
VeriFone Inc.

Canada: An untapped marketplace

Jeffrey Shavitz
Charge Card Systems Inc.

Education

Street SmartsSM:
What does a merchant get for a PCI fee? - Part 1

Ken Musante
Eureka Payments LLC

The art of cross-marketing: How to maximize existing client relationships and boost sales

Peggy Bekavac Olson
Strategic Marketing

Consult your way to success

Tom Hennigan
Retail Cloud

Digging into PCI - Part 12: Maintain a policy that addresses information security for employees and contractors

Tim Cranny
Panoptic Security Inc.

A primer on accountability

Jeff Fortney
Clearent LLC

How to use technology to redefine today's economy

Daniel Burrus
Burrus Research Associates Inc.

Company Profile

NETSURION (formerly Vendor Safe Technologies)

New Products

Skimming alert system

VeriFone PED Authentication Service
Verifone Inc.

End-to-end bulwark

E3 Secure
Heartland Payment Systems Inc.

Inspiration

Change - it never changes

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

June 14, 2010  •  Issue 10:06:01

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SP
Prepaid's role in monetizing social media

With the game card sector of the prepaid card industry growing exponentially, it is becoming apparent how important prepaid cards are in helping online game and social networking publishers translate virtual services into real-world profits.

Game cards act as a way for game card publishers to monetize digital content and interactive experiences, according to Dr. Joost van Dreunen, Lead Analyst and Managing Director at SuperData Research Inc.

Game cards exist in "that intersection between traditional retail know-how and more modern, technology-based distribution models," he said. For van Dreunen, game cards answer the fundamental question of how online game and social media publishers get consumers to spend money in virtual worlds and on networking sites.

"On the one hand you have the phenomenon of the emergence of virtual item sales," he said. "At the same time you have a growing number of game publishers and entertainment publishers, which are primarily or almost exclusively online. How do you translate real money into virtual currencies? The gift card and the prepaid card business is very simple. ... It really enables and opens up revenue to publishers in a way that they haven't been able to do before. So you see a lot of people adopt it as one of their payment methods."

Leveraging content

Accordng to a SuperData report entitled Prepaid Game Card Primer: Monetization and Marketing for Stored-Value Game Cards, 2010 marks a large expansion in the game card market as game publishers like Zynga Game Network Inc. and Meteor Games LLC roll out game cards in retail stores. SuperData estimates the new game card offerings will generate $55 million in 2010.

In May, social networking site Facebook and Zynga entered a five-year partnership. Van Dreunen believes the partnership is part of Facebook's strategy to monetize its content. While Facebook has hundreds of millions of users, it has struggled to generate revenue, he said. Facebook made money through advertising, but that dropped off when the recession hit.

Zynga, on the other hand, has effectively incorporated prepaid cards into its game mechanics, according to van Dreunen. "You can play and play [a Zynga game] and then you hit a ceiling unless you spend a little money," he said. "And they're very, very smooth. And they've figured out the secret sauce when it comes to persuading customers to hand over a little bit of money."

Take a small-dollar purchase of a game card used on a Zynga game to buy a virtual tractor in FarmVille, for example, and multiply it by over 100 million users, and "that's a lot of money," van Dreunen said. Facebook wants a percentage of that revenue, he added. "They want to be the platform that everybody goes to," he said. "And then they take 30 percent of whatever people spend. ... They've been missing out on a lot of the revenue that [Zynga] has been making."

Metrics

Based on a survey of 3,152 prepaid card shoppers, SuperData found that the majority of game card users (76 percent) are between the ages of 13 and 17. That most gamers are teenagers plays into a primary function of prepaid cards: giving unbanked or underbanked individuals without access to credit or debit cards a tool for purchasing goods and services online.

"For game publishers, this means that by offering a prepaid card, they can gain access to a desirable consumer audience," the report said. Additionally, prepaid cards offer retailers three main benefits, according to the report. Prepaid cards:

First, until a card is activated at the POS, it is not considered inventory from an accounting perspective. "This is radically different than most of a retailer's inventory, which must be acquired and shelved," the report stated.

Additionally, prepaid cards are useless to thieves until they are purchased and activated, which eliminates the risk of theft for merchants. Finally, prepaid cards, unlike other products, retain their value and never have to be marked down by retailers, the report said. Van Dreunen sees the aggregation model for game cards as a growing trend typified by the Ultimate Game Card, a product of PlaySpan Inc. and managed by its subsidiary PayByCash. Money loaded on the card can be redeemed at hundreds of online gaming sites.

With limited retail space, "aggregator cards" are more practical than one card per game, van Dreunen said. Also, marketing myriad games under one trusted brand, such as Ultimate Game Card, allows game card buyers (such as parents) to purchase in-game credit for their children without having to know for what specific games, he noted.


For more stories from SellingPrepaid E-Magazine, as well as breaking news and forums devoted to the prepaid sphere, please visit SellingPrePaid.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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