Why Jambool Focused On Payments With Social Gold

Jambool initially formed as one of many start-ups that wanted to turn a profit on social networking apps that prominently featured virtual currency as a source of monetization. The social games scene on Facebook and other networks is crowded, though. That's when CEO Vikas Gupta spotted a way to turn the crowded social game scene into a source of profit: by focusing on providing payment services for them.

"We were focused initially on building our own games, powered by currency systems," said Gupta. "However, given our background of building ordering and payment systems at Amazon, we found [Social Gold] was a platform we could build and build it well. This, for us as a company, is a much larger opportunity than building our own games."

Social Gold launched in October 2008 as a payment system that supports credit card, PayPal, Amazon Payments, Google Checkout, and mobile payments in 37 countries through third-party partnerships. It launched purely as a payment solution, and then added an API in December that allows clients to monitor their currency purchases in their apps. Right now the company is rolling out a system that allow for game users to make payments without having to leave a given game or make accounts on other services. The company also rolls out minor new APIs from time to time, like a late January launch of a testing API for clients. 

"Users who are already logged into the game will be able to pay with their credit cards through us, as a part of the game," said Gupta. "We are very excited for our partners who are seeing a much better conversion and performance with the in-game payments."

Jambool's decision to focus on Social Gold was prompted, in part, by
the observation that new social games monetizing through virtual
currency were appearing far more rapidly than payment services that
could handle their needs. While Gupta declined to mention competitors, he did state that Jambool's decision to enter the payment
services market was motivated by a feeling that social games developers
were being underserved when it came to payment options.

"At that time there were not many options for developers," said Gupta.
"Even now, there isn't anyone offering a simple in-game experience for
users as we do."

The growing state of the social games market, and especially the growth of apps on major social networks, also seemed like a ripe opportunity to Jambool and Gupta. Instead of just being a competitor in a crowded space, through Social Gold Jambool could effectively profit off of that growth by servicing individual games with payments.

"We are seeing increasingly newer opportunities for developers — more platforms are open now than there were a year ago. With every platform, comes the challenge of monetization. Games, usually, tend to be one of the primary drivers of these platforms," said Gupta. "Combining these — we naturally felt that we want to bring our experience to bear to this market, and offer a compelling payments experience to developers and users. We prefer to partner with applications, and provide them a platform to monetize."

Gupta declined to release any stats regarding Social Gold, but instead stated that adoption of the service was growing across the major social networks, including Facebook and MySpace, and was expanding to begin serving independent apps that operated through their own websites and clients. Due to confidentiality agreements, he could not name any of apps, but stated they were virtual worlds, MMORPGs, and casual games.

Likewise, Gupta declined to disclose whether or not Jambool was profitable yet. He did state that the company might consider taking another round of venture capital funding in the future, when the time was right for the company. The round of venture capital Jambool accepted late in 2008, shortly before the company launched Social Gold, was used to help fund the company's transition from a social game designer to a payment service provider.

"We raised it very recently, and we have hired some of the best talent of engineers — people who built Amazon Payments, analytics and order workflow systems," said Gupta. "For us, it was not really a gradual transformation. We are a frugal company, and at some point in our company's timeline, we decided to focus on payments, and we have really focused almost entirely on that. So whatever spending we do, it is largely on growing our company and making it a successful one."

Right now Gupta cites two Facebook apps as examples of the most successful Social Gold clients, (Lil) Green Patch and World War II, which begged the question of Facebook's long-rumored in-house payment solution for client apps. While development of Facebook payments was on hiatus now, that might not always be the case.

Gupta didn't know anything about the status of Facebook payments, but didn't perceive it as a threat to Social Gold's success.

"For one, our platform isn't limited to Facebook alone. Second, we will continue to provide in-application payments to developers on and off Facebook, and that by itself is compelling," said Gupta.

Join us for Digital Kids Conference – April 25-26, 2012 in Los Angeles