Developers say mandatory payment system amounts to a twenty percent net tax

Facebook Credits ‘not helping conversion rates’

A year ago developers had high hopes for Facebook’s new credit system.

"We thought conversions would go up and be around 15 or 20 percent,” said Kevin Chou, Chief Executive for Kabam, “But it turned out to be around 5 to 10 percent, meaning that we’re taking a 20 percent net tax.”

This quote, recorded by Inside Social Games at the Inside Social Apps conference in San Francisco, seems a common sentiment among Facebook Game developers.

The credit system was heralded by Facebook as a way to make it easier for customers to purchase virtual goods. What seems to be more telling to developers however, is the thirty percent cut Facebook takes from these transactions.

“Facebook credits is a wash for us,” said Funzio co-founder Anil Dharni. “It increased the conversion rate but we actually saw a gradual decrease in average revenue per paying user. It’s hard to know why.”

Funzio has now shifted emphasis away from Facebook to iOS.

Zynga, which contribues fourteen percent of Facebook’s revenue, draws just over a two percent conversion rate.

With Facebook drawing $1.4b in revenue for developers last year, it risks losing developers to iOS, which reported $700m for a single holiday quarter.

Wooga seems to stand alone in defending Facebook Credits. Chief executive Jens Begemann said his company had been on Facebook Credits "since day one", and so escaped any negative trends. He noted he hadn’t "heard anyone complain about Apple for their thirty percent revenue share."

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