Facebook Takes $200M Investment, Implications for Virtual Goods Biz Abound

Facebook announced this morning that Digital Sky Technologies (DST), a Russian investment group, had purchased a 1.96 percent stake in the company for $200 million. The deal had been the subject of a number of speculative pieces in both The Wall Street Journal and TechCrunch over the past week.

Facebook confirmed the investment via a press release this morning.

"This investment," said Facebook CEO Mark Zuckerberg,"demonstrates Facebook's ongoing success at creating a global network for people to share and connect. He added, "A number of firms approached us, but DST stood out because of the global perspective they bring -– backed up by the impressive growth and financial achievements of their internet investments. We’re looking forward to working with the DST team."

In a conference call which took place shortly after the deal was
announced, Zuckerberg said he was particularly interested in
working with Digital Sky in order to look more closely at how various social networks in the DST portfolio were using different models,
including micropayments, to monetize their audiences.

Zuckerberg clearly has virtual goods and microtransactions in his sights. Currently, users can purchase virtual gifts on the social network. In late 2008, CNET crunched some numbers and came up with the following formula: it took estimates of Facebook revenues of between $300 million and $350 million and then factored in one venture capitalist's estimates of virtual goods sales of between $28 and $42 million. Taking the middle road and estimating virtual goods sales of $34 million, that would mean "a shockingly high 10 percent of revenue" coming from virtual gifts, according to CNET.

Additionally, Facebook confirmed in March that a proprietary virtual currency was in development, and a beta test was begun in mid-April.

With 200 million users, a full-blown virtual currency or a more sophisticated gifting scheme along side a fully-developed payment platform could have huge implications for the company — and likely drive substantial revenues to its investors — of which Digital Sky Technologies is now one.

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