An online marketing company has adapted a payments tool for Twitter Inc.'s microblogging service that generates revenue by converting real money into virtual money.
KITNMedia Inc. in Vancouver, Canada, announced last week that it has created a version of its Super Rewards payments system to work with a popular multiplayer game, 140 Mafia, which takes its name from the maximum number of characters people can use when they post updates through Twitter's service.
Jason Bailey, KITN's chief executive and co-founder, said the Super Rewards system lets people use existing payments methods to initiate transactions in new settings.
The challenge in accepting consumers' payments through the Twitter service "is that some of these tools aren't there already. You have to build them out yourself," Bailey said.
Super Rewards is aimed at new game formats that flourish on social networks and which do not require players to buy the games up-front. Instead, people can purchase virtual items within the game, for real money; the business model depends on convincing playerss to make numerous microtransactions.
"The games are all playable for free, but if you want a competitive advantage in the game — if you want a faster horse or new tires for your car or a stronger sword, etc., etc., — then you can go to this special place within the game to earn extra points or tokens or credits or whatever" by buying them with real money, Bailey said.
Players of 140 Mafia can make small purchases by clicking a link within the Twitter messages they receive as part of the game.
The link takes them to a Web site where they can buy a variety of virtual items using credit cards or PayPal Inc.'s online payments service.
The average Super Rewards transaction is $5, he said.
There are some challenges in monetizing Twitter this way, Bailey said. First, since these updates are visible to everyone who subscribes to a player's Twitter feed, there is a fine line between advertising and being annoying, he said.
Players can also use the Super Rewards system to receive in-game credits by signing up for a trial of various services.
Bailey said this is the most complex part of his company's payments system; when someone signs up for a trial service, KITN has to make sure they actually get access to the service and that they get the virtual currency they are expecting.
"There is a long, long list of challenges that we face in tracking," Bailey said. "There are a lot of places along that chain where things can fall apart and often do."
Though his system is designed to run in a social networking or microblogging environment, Bailey said Super Rewards could also work with traditional e-commerce.
"It's just a new way to get money in and out of the Internet, and whether that is ultimately used to buy a virtual weapon in the mafia game or buy a shovel at Home Depot shouldn't really make a difference," he said.
Bruce Cundiff, a director of payments research and consulting at Javelin Strategy and Research in Pleasanton, Calif., said it is difficult to introduce payments systems to social networking Web sites because many of them come and go quickly.
"The names in social media aren't necessarily around for the long haul," he said.
"Friendster, MySpace, they have a shelf life. So when you say you want to capitalize on the social media trend, you have a moving target."
Even PayPal has had its share of missteps, Cundiff said. PayPal was originally designed as a payments system for handheld personal organizers, and only after this model failed to catch on with users did the company realize its system was ideal for eBay Inc.'s online auction system.
"It took three or four tries before PayPal got it," he said.
Other social networking services and games are building or using other payments systems.
Microsoft Corp.'s Xbox 360 console, for example, lets players purchase Microsoft points that can be used to buy items in various games, including new songs for the Rock Band and Guitar Hero games.
And Facebook Inc. is reportedly developing its own payments system to let users transact within games and other applications designed to run on its social networking site. (Facebook did not respond to inquiries about this topic.)
Cundiff said that these systems are signs of the increasing competition to develop payments features within social networking sites, a pattern he has seen before.
Before eBay bought PayPal in 2002, it tried its own competing system, Billpoint, with Wells Fargo & Co., but PayPal still won.
"That's how I see it playing out with social media," he said.
That said, Cundiff questioned whether KITN has the potential to move its system beyond social networks.
"Virtual currency works in virtual worlds, [but] it only goes so far," he said. "I'm not going to buy a set of golf clubs" with virtual money.
