Thursday, May 10, 2012
Facebook to sell apps through new online hub
The new App Center, which Facebook said will launch in the next few weeks, comes as the company is preparing an initial public offering that would value the company between $77 billion and $96 billion.
A key concern for investors is Facebook's slowing revenue growth, due in part to the widening trend of consumers accessing its service on smartphones, where Facebook provides limited ads.
In an amended prospectus filed with the Securities and Exchange Commission on Wednesday, Facebook said the popularity of mobile devices has caused its number of daily users to grow faster than the number of ads it is delivering.
Facebook described the number of mobile ads it has recently begun showing to users as "immaterial."
Facebook makes the vast majority of its revenue from online ads, although it also collects fees when consumers purchase goods from within social apps, such as Zynga's Farmville.
The App Center will, for the first time, allow software developers to sell apps to consumers directly on Facebook.
Consumers will need to use Facebook Credits, the company's payment system, to purchase the apps and Facebook will take a 30 percent cut of the revenue as it does with in-app purchases, said Facebook spokeswoman Malorie Lucich.
Facebook is introducing the app service to give software developers additional options, but the company expects in-app purchases to remain more prevalent on the social network, said Lucich.
Apps, ranging from social games to music services, are popular activities on Facebook, the world's No.1 online social network with roughly 900 million users. According to the company, 200 of the apps that are available on Facebook have more than 1 million users.
The App Center will feature apps that designed for PCs as well as for mobile devices such as Apple Inc iPhones and Android smartphones. If a mobile app requires installation for the mobile device, Facebook said it will direct users to Apple's App Store or Google Inc's Play store to download the app.
The App Center will showcase apps based on the quality scores that users give apps and other data Facebook collects, such as how often and how long people use apps. Each user will see a different, customized version of the App Center, rather than one standard version of the App Center.