The mobile web, not the smartphone or traditional web, is Facebook’s most popular interface. Now those hundreds of millions of users, including prepaid mobile customers in emerging markets who lack credit cards, will be able to make in-app purchases and earn Facebook money thanks to its announcement of mobile operator billing for Credits virtual currency purchases.
This is a big step towards Facebook’s monetization of mobile despite smartphone platform domination by Apple and Google. For people without credit cards where Facebook Credits gift cards aren’t available, operator billing won’t just be a convenience, it could become the main way for them to participate in the Facebook mobile app economy.
In a talk with TechCrunch writer Ingrid Lunden this morning, CTO Bret Taylor said that the Facebook mobile web has twice as many users as Facebook for iOS or Android. Those smartphone platforms had roughly 57 million daily active users and 85-100 million monthly active users when Facebook stopped publicly reporting their counts at the end of 2011, indicating Facebook for mobile web could have well over 110 million DAU and 170 million MAU.
Even if only a small percentage of those buy Facebook’s Credits virtual currency through operator billing, it could turn into an important revenue stream for Facebook. Still, Facebook may have to pay a large chunk of its 30 percent tax on purchases to the operators, and the credit card-less might not have tons of disposable income.
In the U.S., U.K., and other developed markets, teens and those without credit cards buy prepaid Facebook Credits gift cards at retail stores, and redeem them to make in-app purchases. Similarly, prepaid mobile users accessing the Facebook mobile website could pay cash at a local store to top up their mobile account, and then use their balance to buy Facebook Credits. This means Facebook won’t have to get prepaid Credits gifts cards available world-wide, it can just piggyback on the already ubiquitous mobile refill cards. Users can earn Credits through offers, but high reward offers often require a large credit card or PayPal purchase.
Facebook is working on operator billing deals with AT&T, Deutsche Telekom, Orange, Telefónica, T-Mobile USA, Verizon, Vodafone, KDDI, SOFTBANK MOBILE Corp, and they must be excited. Few have had good luck with their own app platforms, so grabbing a cut of Facebook’s 30 percent tax on Credits will give them low-effort revenue where they were failing before. If Facebook’s mobile app platform produces sufficient sales, more operators are likely to come calling.
An enlarged population of monetizable users could also make Facebook’s mobile platform more attractive to developers who are already slammed with releasing their apps for iOS and fragmented Android builds. While Facebook tells me it doesn’t view its support of Facebook integrations into HTML5 apps as direct competition with Apple and Google’s platforms, it surely wouldn’t mind developers producing apps for the one platform where it can collect its 30 percent tax.
The biggest threat Facebook listed in its S-1 to IPO was its inability to monetize mobile. Suddenly mass accessibility via the mobile web doesn’t sound like such a bad alternative to owning a smartphone app platform.
[Image Credit: Time]