The silo state of video game currency is likely to cause user frustration as games like
“Tom Clancy’s Ghost Recon” from Ubisoft are launched across consoles, the Internet, mobile devices and Facebook. The way things currently stand, a gamer couldn’t access his or her game credits bought through Facebook (with Facebook Credits) when playing the game on a different platform (e.g., through Apple and iCloud).

So this is a big happy development for gamers, and the gaming companies are happy to manage balances across platforms if it keeps the userbase mashing buttons. Facebook is still happy because it gets a 30% share of all Credits revenue.

But here’s the question — is the Apple-Facebook agreement one-time deal between tech giants or the start of a bigger relationship? Facebook CEO Mark Zuckerberg and Apple CEO Steve Jobs famously had dinner last year (Could Wallace Shawn play Jobs in the film version?), but no one knows what they talked about. Apple, in particular, could use a partnership as the chief reason its Ping social network didn’t catch on was its lack of Facebook integration.

Imagine buying albums on iTunes or apps at the App Store with Facebook Credits… It doesn’t seem that far-fetched, and it could be an incredible revenue stream for Facebook. With the revamping of Facebook Deals into a group-buying service last month, the social network enabled users to buy vouchers for real-life goodies with Facebook Credits. All signs point to Zuck Bucks gaining even more buying power…

What kind of “mechanics” are we talking about? All kinds of loyalty-building gizmos like leaderboards, virtual achievements, live activity streams, mini profiles and rewards triggers for time-based activities. These can be quickly built and integrated across digital brand bases using the new Widget Studio.

In addition to ensuring a consistent brand experience across channels, the mechanics offer further consumer insight through tracking user behavior. Interscope Records and Island Def Jam (Universal Music), Bluefly.com, Major League Gaming and LiveMocha are few of the brands using BadgeVille’s gamification services.

“Our vision for building Badgeville is to offer the most powerful, lightweight software-as-a-service platform to reward, influence and measure user behavior. Now with a growing team of thought leaders in game design, engineering and social media, this vision has become a reality,” said Badgeville CEO Kris Duggan. “The Dynamic Game Engine and Widget Studio take gamification to the next level, and open up infinite opportunities for game mechanics to help businesses reach user-driven objectives and revenue.”

Developed entirely (and, according to the press release, pretty painfully) in-house by creative agency ATTIK, the game promotes a $1,000 rebate for qualifying college graduates buying or leasing a car through challenging them to propel a cartoon Scion off a ramp and into various college-themed targets (student loan officer?). The game features three levels of difficulty, and points are earned by not only destroying the targets but also for hitting other random objects (homemade bongs?) and trashing fewer Scions.

Any resemblance to a certain best-selling mobile game about hot-tempered avians I’m sure is completely unintentional.

Demo for Scion’s College Rebate Rally Game from ATTIK on Vimeo.

I hope there’s a message somewhere in there advising college kids not to hurl their cars into concrete walls at high speeds… But all joking aside, the targeting aspect is smart — those smarty-pants college kids love their satire, and using a slingshot to destroy stuff is an ageless sport.

In addition, the ATTIK guys suggest the game is pretty revolutionary in the way it was designed, jumping the animation hurdles typically presented by the iPad’s javascript engine — my brain began hurting a bit reading about the development details, a clear sign it’s way too technical for a lowly journalist like me to understand.

“The Rebate Rally pushes the boundaries of what’s possible in HTML5, and we hope people will take notice,” commented ATTIK Principal Design Technologist Paul Hulett. “We are big believers in gamification, and feel that this game and our other recent projects demonstrate our leadership in creating ads that are smart, approachable and engaging. With ads moving out of Flash containers and into integrated browser experiences, and needing to engage customers more than ever, we are ready to lead the revolution.”

But that Gavin is gone, replaced by a hard cynical shell that doesn’t blink an eye when hearing that, despite the offer-marketing scandal that hit the arena late last year, virtual goods revenue will hit $1.6 billion this year and $2.1 billion, according to the Inside Network.

Tin, heartless Gavin does raise an eyebrow in Spock-fashion at mobile app recommender Flurry’s findings that 80% of revenue from iOS apps during September came from mobile virtual goods via in-app sales. Yes, virtual goods made four times as much revenue (around $9 per user) for iOS developers than advertising ($1).

And this isn’t a new trend — apparently January was last month ad revenue came in higher than virtual goods revenue. Check out the chart below:

The data comes from a sample of major iOS social networking and gaming applications with a combined daily reach of 2.2 million active users. The study only covers Apple’s iOS because Google’s Android doesn’t currently enable in-app purchasing on its platform. Developers like Android more long term, but the lack of in-app buying would seem to be a huge strike against the platform.

Flurry proposes a major reason for the low advertising revenue is agency skepticism surrounding social games and social mobile media as viable advertising channels.

“With these agencies representing and guiding the biggest brands, they appear to be missing a meaningful opportunity to reach a mass market of consumers who have adopted new platforms and forms of content,” writes Peter Farago, Flurry’s VP of Marketing. “As social games continue to expand their consumer reach, demonstrating their ability to attract an audience beyond teenagers using iPod touches, their relevance will increase.”

The Inside Network does have one prediction I’m finding hard to swallow: virtual good revenue exceeding $4 billion in 2013. I’d imagine the novelty of virtual goods would eventually wain and the growth curve would become less steep. Then again, virtual goods don’t have any novelty for me (Luddite I am, I’ve never played Angry Birds either, though it sounds like fun).
Do you guys think virtual goods revenue will keep skyrocketing or start to plateau in the near future?

- As the Goliath of the social gaming space, it’s not surprising to see Zynga, developers of Farmville and Mafia Wars, soak up little guys such as Dallas-based Bonfire Studios, which released the “We Farm” iPhone App in July. Bonfire rose from the ashes of Ensemble Software, the PC and Xbox developer of games like Halo Wars that was shut down by Microsoft. The company will be renamed Zynga Dallas and the founders will assume new roles: David Rippy will be general manager; Bill Jackson will be creative director; and Scott Winsett will serve as senior art director.

- Mobile ad exchange Mobclix has been acquired by London-based mobile marketing agency Velti — terms of the deal were not disclosed, but TechCrunch heard rumors around $50 million. The Mobclix exchange connects more than 25 mobile and online ad networks, serves. 8.5 billion ads per month and is used by 15,000 app developers. Mobclix executives are always good for thoughtful commentary regarding the mobile ad industry.

- In a pretty sweet acqu-hire, Internet marketing firm BlueGlass Interactive has bought search specialist 3 Dog Media and all its software and intellectual property. However, the real diamonds are the additions to the BlueGlass staff: 3 Dog CEO and search marketing whiz Greg Boser, who will become BlueGlass’ new SVP of search; BlueGlass co-founder Dave Snyder, will become SVP of product development; and lead programmer and expert WordPress developer Dax Herrera, who now be director of product development.

TechCrunch’s Michael Arrington did some old-fashioned muckracking and discovered that Google has quietly invested $100 to $200 million into Zynga, social gaming’s kingpin and the makers of FarmVille and Mafia Wars. Unnamed sources, always my favorite, told Arrington and VentureBeat that Google made the investment, not its venture wing.

“Zynga will be the cornerstone of a new Google Games to launch later this year, say multiple sources,” Arrington wrote. “Not only will Zynga’s games give Google Games a solid base of social games to build on, but it will also give Google the beginning of a true social graph as users log into Google to play the games.”

Buoying this idea is Google’s new hire Mark Deloura, a games evangelist, and a classified for a Product Management Lead on Google’s site.

You don’t have to be a soothsayer to predict that Google Games will be an integral part of Google Me, upping its ante in being a Facebook contender.

Virtual goods and free-to-pay trade-ups would also make a killing for online payment processing service Google Checkout. PayPal, which recorded $500 million in virtual goods payments last year, announced back in March that Zynga was its second largest merchant behind parent eBay.

Earlier this year, the tech media was a-flutter with rumors that Zynga would depart Facebook and launch its own gaming site, but in May the two companies agreed on a five-year strategic relationship that cemented Zynga’s spot on Facebook and expanded use of Facebook Credits in the company’s games. Zynga is projecting $1 billion in revenue in 2011.

If they become direct competitors, can Zynga feasibly maintain intimate relationships with both Google and Facebook?

Today I want to discuss two complementary channels for direct response advertisers, as well as brand advertisers who have clear engagement metrics: performance display on social networks and in-game advertising.

Performance Display on Social Networks

Facebook is the dominant provider in this space and the best place to start. Growing from 300 million users in September 2009 to 400 million in January 2010 is impressive. Even more staggering is when Facebook COO Sheryl Sandberg was quoted at Davos as reporting that 50% of Facebook users come to the site every day.

This is an audience that cannot be ignored.

Fortunately, Facebook provides a rich set of targeting criteria including geography, age, gender, education and even relationship status that allow you to sift through the 400 million users to your exact audience. Of course, targeting by itself is not enough. As has been discussed in the past on Adotas, advertisers must craft a consistent message, from ad copy all the way through the final steps in the conversion funnel – and for each niche audience. They must also measure and adjust to ensure optimal campaign performance.

In-Game Advertising

Users on Facebook spend more time on applications than on any other section of Facebook with the exception of the home page, according to a May 2009 study by Nielsen. What is the majority of these applications? Games.

The dominant form of in-game advertising is done via offers in which an advertiser defines the exact engagement criteria and, in return for completing the engagement, the consumer is rewarded with a small amount of virtual currency that they can use in the game. A sample of successful consumer engagements include:

• Watching a movie trailer then joining the movie’s fan page
• Submitting a credit card offer
• Registering for a trial membership at a fitness club

By combining a performance display buy with in-game advertising, advertisers are able to significantly increase their reach as well as engagement. Where do you start? Facebook for performance display and Adknowledge as one option for in-game advertising.

Through the new cross-platform social gaming tech — which connects users wherever they’re playing games, be it Facebook or their iPhone — a player can see other people that our playing solitaire, challenge friends, chat about the game (“Where is that damn ace of spades?!?”), post stats on a Facebook page or enter a tournament with a jackpot.

In other words, Yoo-Mee takes existing casual games, breaks down platform barriers and turns them social just through adding a layer of tech.

“All the social features taking place in a game like Farmville — competition, gathering badges, gifting — can now be applied to solitaire” or any other online game, said Prita Uppal, CEO and founder of Hooked Media, which introduced Yoo-Mee on Tuesday. “And that can be solitaire on Facebook, solitaire on your iPhone or solitaire on the web.”

In essence, she said, Yoo-Mee is providing additional monetization for game developers — akin to a power-up or a growth mushroom from Super Mario Bros. — while improving engagement and stickiness. All publishers have to do is sign up and insert Yoo-Mee’s embed code to get with the system and use it to drive traffic to their sites.

In addition, Yoo-Mee serves ads in free-to-play versions via both direct relationships with advertisers as well as ad networks. The platform also offers targeting by demographics and channel.

There are two types of currency on the platform: loyalty currency that users earn through playing games and inviting friends, which they can use to enter into tournaments or redeem for virtual goods; and paid currency for skill games to participate in cash tournaments with real jackpots. However, barriers to entry are low and rise in 50-cent increments.

Though Hooked is currently working with offer companies such as SuperRewards, offer deals have not yet gone live with Yoo-Me. Part of the reason Hooked has held off on employing offer marketing is because of the brouhaha that erupted last year in the virtual goods and currency space.

“It amazing how that whole segment has come to a halt,” Uppal said. She noted that while in the past the offer people were some of the biggest sponsors and participants at gaming conferences she attended, but even at the one that Hooked Media sponsored last week in Germany, there was nary an offer presence — no sponsors or panelists.

With a strong engineering background Uppal earned an MBA from Harvard and developed a yearning to do something entrepreneurial, particularly in a field she could get excited about such as entertainment. After building a startup DVD gaming company focused on Bollywood trivia, online initiatives caught her interest and she soon immersed herself in the world of gaming.

Uppal set up shop in San Francisco, center of entreprenurial energy and a haven for gaming, and brought Hooked into being with funding by U.S. Venture Partners and Altos Ventures — which are both literally down the street from Hooked’s offices. With a staff of 21, Hooked has thrust Yoo-Mee upon the gaming world within 14 months of the company’s creation.

At this stage in the game, user feedback is cherished and Hooked has devoted a lot of time to analyzing the mounds of data from Yoo-Mee’s internal feedback engine. Hooked’s product pipeline is chock full, including time-sensitive tournaments and more personalized offerings that take advantage of a user’s social graph.

“We’ve got a roadmap that will take us well to the summertime.” Uppal said. “We have a lot of features done and ready but we’re going to release them in stages to increase the user excitement, show them that these things will continuously be added — the Easter eggs.”

In EA’s “Dante’s Inferno,” you get to battle demons through nine circles of Hell; I think they might have taken some liberties with the source material (ahem, Beatrice was in Heaven in the poem, not kidnapped by Satan), but according to reviews the designers tried to keep the topography and demons as close as possible to the original text. I guess that’s noble in some way — I’ll try to get the English major in me to stop screaming…

To market this piece of literary blasphemy — I mean, video game, Lolapps launched a Dante’s Inferno Facebook game about two months before the release of the real thing. Within a week, the game had a million players and it’s averaged 4 million monthly.

Surveying the players, 52% said they learned of the game through Facebook and 62% who tried it said they were going to purchase it. Also the majority of players installed the game at a friend’s invite. Two percent of users actually converted, clicking over to EA’s store and buying it.

So the potential of Facebook gaming grows and grows — if it does this well for a video game, what other kind of branded entertainment could move products? By the way, Lolapps might be rather challenged by “Inferno’s” sequel — “Purgatorio.”

“Predicto,” the most popular game from Snackable Media, sends subscribers text-message survey questions — popular right now are a slew of opinion polls related to the Jay Leno/Conan O’Brien/NBC showdown. Users send their answers back with the opportunity for a $50,000 payout. The monthly subscription fee is $9.95 and a user sticks with it for an average of three to four months.

Sound ridiculous in the age of fancy-pants smartphone games? Not really — after tripling its net revenue in 2008 from $30 million to $90 million, Snackable sold $170 million worth of text-based games in 2009.

Though they aren’t as glamorous as their smartphone peers with all their fancy “pixels” and “graphics,” “Predicto,” the SMS version of TV hit “Deal Or No Deal” and “Celebrity Squares” are simple, addictive and, most important, are perfect for the masses without smartphones — they need bread and circuses too.

Snackable’s marketing makes it all the more impressive. Bypassing app dealers like Apple’s App Store or Google’s Android Market, the company markets directly to potential subscribers and splits gaming revenue down the middle with carriers. In addition, the fee shows up on the phone bill — that whole get it now, pay later has been working wonders with impulse shoppers for generations, especially those yearning for entertainment.

Not surprising, in a previous life (that would be before November 2009) Snackable was better known as Next Web Media and has roots as a cost-per-acquisition ad network. In the gaming arena, which seems to be the domain of intermediaries, Snackable has been wildly successful in directly connecting with consumers — newly launched games become profitable after three months.

However, the proliferation of smartphones is upon us; the flood of Android devices has only begun. I would guess that the days of text gaming are numbered as everyone gets hooked up with a fancy phone.

Snackable is developing smartphone apps and games, CEO Eyal Yechezkell told TechCrunch, but is focused on Facebook integration and giving users the ability to include text responses in their streams. As with their SMS products, Snackable is planning to forgo app markets, market directly to consumers and give carriers a cut of the revenue.