Enter "Facebook Credits" in the Quora search box and you will find some 30 questions regarding technical issues such as whether users can send Credits to friends, or whether Page administrators can accept Credits to sell products. Nearly all of these questions remain unanswered, while more open-ended, theoretical queries regarding the future of Facebook Credits often have several responses.
We believe that Credits remain a high strategic priority for Facebook, even in the apparent absence of any moves outside of the gaming space. Recent news that Facebook has created a payments subsidiary, and growing rumors of a payments-related acquisition in 2011 seem to suggest that Facebook envisions a greater role for Credits in the near future. But what will that role be?
E-commerce is of course the most logical use. While leveraging Facebook's targeted advertising capability, merchants could use Credits to effect transactions without their customers ever having to leave the platform, thereby eliminating the spectre of sales friction. Forrester Research analyst Sucharita Mulpuru, however, disagrees, citing a lack of genuine e-commerce success stories despite Facebook's enormous reach, and the fact that paid search and e-mail results in far greater customer retention rates.
Despite the uncertainty of its future in e-business, we believe that Credits could possibly have a future as a tool for raising digital capital. SEC Commissioner Mary Schapiro recently suggested that crowdfunding via social networks might be allowable for aggregate amounts under $100,000 with a maximum commitment of $100 per investor. To date, crowdfunding has been used primarily to fund "creative" projects as opposed to businesses, presumably to avoid running afoul of U.S. securities laws. Small developers could tap the Credit marketplace to crowdfund their development efforts, using the proceeds of small offerings to purchase products or services from other developers working within the Facebook ecosystem.
Bottom line: We are bullish on Facebook Credits in the long term.
