UPDATED 17:33 EDT / AUGUST 01 2011

NEWS

More than 12 Million Users Pay for Facebook Games Every Month, says PayPal

According to data released by e-payments vendor PayPal, over 12 million users fritter money on Facebook games, comprising about 1.6 percent of the social network’s 750 million users. A little less than 2 percent may not sound like too much but it’s enough to hold together a company as huge and successful as Zynga, netting millions of dollars in quarterly revenue.

“The growth of PayPal in games was organic, and now there are more and more ways to pay for goods online,” said Carey Kolaja, senior director of emerging opportunities at PayPal.

PayPal said the monetization of digital content is a far cry from when the company started in ’98 and acquired by eBay in 2002. It now takes home a billion in quarterly earnings and has over a hundred million active users. More than 40 percent of adults play online games, and 70 percent of them are PayPal customers. 62 percent of virtual goods sales in North America are expedited by PayPal or credit cards, and users even said they are willing to purchase more virtual goods if it were to earn them loyalty credits.

eMarketer estimates the virtual goods market will reach $1 billion in 2011 while Inside Network doubles that prediction and declared $2.1 billion in North America alone, and $6 billion worldwide with a bigger fraction of development to be credited to Asia.

The digital payments vendor prides its transaction architecture to be more than competent to battle fraud. It has a decade of experience when it comes to fraudulent transactions and has devised algorithms and automatic formulas to stop these fishy deals from happening. The company is a subsidiary of eBay and can be used to pay for physical goods on auction websites as well.

PayPal has been working to expand to more areas of monetization. It recently locked a deal with XBox Live and the extension is frictionless so far as more gamers are willing to pay virtually .

“In massively multiplayer online games, the number of paying gamers keeps going up,” Kolaja said. “The perception about digital goods is that they lead to micro transactions, which are small. But the average purchase for a paying user is in the mid-20s (in dollars). It is on a positive trajectory.”

Moreover, PayPal managed to persuade Facebook, whether directly or indirectly, to use its platform to pay its developer community, as announced by COO Sheryl Sandberg. PayPal is, without a doubt, the concierge of e-payments today.

While PayPal is going on a heyday expanding here and there to accommodate more users to its platform, AntiSec is asking PayPal users in an open letter to shut their accounts and consider an alternative–in the name of true freedom. This is an act of protest against the company locking down donations to be sent to Wikileaks. Meanwhile, Zynga is going for IPO as it appears on the SEC books marked as S-1 filing. It is yet to become final, but the company looks forward to raising about a billion from the transaction. Zynga also partnered with Tencent not too long to extend CityVille to Facebook-hating China.


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