The $25B Battle of the Virtual Currencies — PlaySpan, GameCoins And RewardVille

Visa’s move to purchase Playspan for $190M validates the increasing importance of virtual currency in the electronic commerce market. Competitors in the space are now pressing ahead to capture a part of the $25B global digital goods market. More after the jump.

Santa Clara-based Playspan was founded by Karl Mehta and currently has close to 150 employees. Playspan’s flagship product is their UltimatePay payment system that enables developers to monetize their audience with virtual goods. Playspan also sells the Ultimate Game Card gift card at close to 50,000 retail locations globally. UltimatePay has users across 180 countries that use PlaySpan’s solutions to purchase currency on over tens of millions of games.

Visa’s Playspan acquisition is complementary to its other acquisition of CyberSource recently and in line with its longer term e-commerce strategy. Visa is paying about $190M in cash for Playspan in addition to bonuses for performance milestones. Playspan has in the past raised $42M from investors including Vodaphone Ventures, SoftBank and others. The entire global e-commerce market is a $948B market with the digital goods sector being close to $25B – so its no surprise that players are vying to capture a piece of this space.

Playspan has both a consumer and corporate focus that can be accessed from its site. On its consumer focused section, consumers can buy or earn ultimate points by filling out third party offers. 100 Ultimate Points are equivalent to $1 and can be spent in various games that are part of Playspan’s network. This is great for the users as it drives discovery of games but the site seems to be lacking in core social features that players have come to expect in the social web.

A competitor in the space – Sometrics – is offering a similar experience on GameCoins.com. GameCoins.com, which was relaunched in June 2010, is a great a place to discover new games and it’s a marketplace focused around transactions of digital goods but also just transactions from a community standpoint: who’s playing what. One of the interesting learnings Sometrics‘ gained from this experience was to have a destination for people to go to see what’s going on. Every action that is done on Gamecoins connects with Facebook and connects with Twitter, helping you reach new gaming friends. Playspan.com was very much lacking in that ‘social’ element which prompted Sometrics to launch Gamecoins.com.

Users are from 100 different countries and have 100s of games from different platforms to pick from. There are approximately 2.5 MMAUs spread over 100s of different countries. Users can do quests / missions and can also buy gamecoins that are available through payment options. An example of a mission would be like go achieve a a certain level in ‘wonder city’. Over 1 million missions have been completed, with over 30,000 missions being completed each day. GameCoins.com also gets a lot of links from Google for specific topics such as ‘how do I ‘x’ in game ‘y”. With over 150,000 articles written by users, that’s is a lot of content for Google to index.

In the same arena, Zynga recently announced RewardVille – a place where users level up and earn zCoins to spend in Zynga games. This works for them because Zynga has a big enough network where cross promotions can work for them and have a centralized network with points and such. Zynga sees the value in harnessing loyal users for its games and Gamecoins.com’s idea is to drive loyalty across various games.

GameCoins has a lot of the features that 200 million users interact with. GameCoins will offer users the ability to explore what’s going on and make it a social experience. The wallet experience will eventually transcend traditional gaming networks and into the retail market. Figuring out how to transact across digital media will help achieve the billion dollar dream indeed. Look forward to some pretty interesting announcements from all these players to come.

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