In a recent report from TechCrunch, Facebook Inc (NASDAQ:FB) is looking at the publishing of games through mobile ads in order to share revenue with game developers. It's important to note that Facebook Inc (NASDAQ:FB) will not be developing the games themselves, but would utilize their mobile reach through advertising to distribute games made by smaller mobile companies who would never have the reach that Facebook does.
With publishing, Facebook Inc (NASDAQ:FB) would share in the revenues made on in-game purchases and the game itself if it came with a sticker price and was not released free of charge. While this was confirmed to TechCrunch by people at Facebook, Facebook has yet to release any specifics regarding who they are talking to or what the revenue share might look like.
Facebook Looking to Leverage its Reach With Games
Facebook Inc (NASDAQ:FB) is presently making quite a bit of money from in-app purchases on its desktop platform but has yet to make these same inroads in the mobile market. The primary reason being that Apple and Google own their respective app stores and taking a 30 percent cut of revenues from developers.
To date, Facebook Inc (NASDAQ:FB) has only been able to make money by selling mobile ads to game developers, something they are clearly looking to change.
Game publishing harkens back to the days of console games where companies like Activision and Electronic Arts would take on the large cost of marketing games that smaller companies were unable to do on a large scale. Mobile game marketing, however, requires less work these days. And developers really need to ask themselves if it's worth the significant revenue loss that is incurred if a title becomes a runaway success.
Facebook Will Act as Marketing Agent to Smaller Developers
The cost of marketing super-sellers does remain high—just a year ago, developing a game and marketing it might only cost a couple hundred thousand dollars, now you have companies like Kabam, King and Supercell who are able to throw millions of dollars a month at marketing games. Something that smaller developers are in no position to do. Essentially, partnering with Facebook grants smaller companies immediate legitimacy.
Despite the fact that Facebook Inc (NASDAQ:FB) has always made money on desktop advertising, before adding $1.5 billion in mobile ad sales annually in a very short period of time, the company clearly believes that they are missing out on mobile revenue streams and clearly believes publishing games could change this.