Facebook has announced its IPO, which might end up being the largest ever. However, there could be a ripple effect on Facebook game developers and not necessarily a positive one.
“Facebook going IPO has both its advantages and disadvantages for the gaming community,” said Jesse Divnich, analyst for EEDAR. “On the positive side, Facebook’s IPO will put additional pressure on the company to continually innovate its back-end technologies, which will add additional resources and tools for game developers to experiment with. On the negative side, Facebook will command a high multiple in the open market, signifying that investors expect aggressive revenue and profit growth, which could force Facebook to ‘tax’ video games more than it already does. This could include various license fees, tool fees, or Facebook connect fees.”
“Yes, their IPO will impact social games,” said Michael Pachter, analyst for Wedbush Securities. “They will be under pressure from investors to deliver revenue and profit growth, so they will have an incentive to find creative ways to get Facebook users to register credit cards and engage in commercial transactions. That could be renting a video stream, downloading a song, buying a discount coupon, or buying virtual items in a game. The point is that once they have a reason to get users to register credit cards, buying virtual items will be far easier for those who play social games and who haven’t yet bought anything (much like one-click ordering on Amazon). I think that is good for the social games makers.”
Source: IndustryGamers.com
