San Francisco-based hi5, which operates the third largest social networking service in the world, is announcing a partnership with PlaySpan today in an effort to get more revenue out of its 60+ million members. PlaySpan, famously founded by a 5th grader two years ago, will henceforth be powering micropayments for virtual goods and premium content sold on the social network.
Two of PlaySpan’s payment solutions will be used (PayByCash and Ultimate Game Card), getting the most out of the variety of payment methods used across the globe, which is essential for hi5 since the large majority of its users are located outside the U.S (about 40% speaks Spanish, for example). The company’s subsidiary PayByCash is able to support approximately 80 payment methods in 180 countries and boasts an extremely low fraud rate, and the addition of hi5 to its customer reference list further validates the alternative micro-payment platform.
Hi5 will also offer its subscriber base the ability to buy and use PlaySpan’s Ultimate Game Card, a pre-paid game card available for purchase online and in more than 21,000 retail stores across the U.S. and Canada (and apparently soon expanding to other countries).
For actual transactions on the social network, the company continues to bet on hi5 Coins (which can now be paid with using PayByCash), a virtual currency it launched late last year, which I’ve personally always considered a strange move considering it requires users to get accustomed to using a currency that can’t be used for anything else outside of the network while standard ‘gift credits’ seem to work just as well.
Either way, the company is clearly trying to ramp up its revenue streams, recently launching a casual gaming section which hi5 said would prove very important for making money in the long run, and partnering with Paymo to power mobile payments for virtual goods. The partnership with PlaySpan once again shows that monetization through anything but advertising is the key focus over at hi5, and recent reports show that that may be the best strategy worth pursuing.
You may remember Habbo, which we reported pulled in $74 million in revenues last year, mostly from virtual goods, or the market analysis on Chinese social networks, whose business models have long relied mostly on sales of virtual gifts rather than online advertising. Expect to see more of these reports in the future.
Finally, it’s also worth noting that hi5 has been on a cost-cutting spree, recently slashing an estimated 50% of its workforce.
seems like an act of desperation. stick a fork in this company. no business model = failure!
Wow! now I have 80 ways to buy a ‘kitten in a cup’ gift! too bad hi-5 blows.
a 5th grader?
A dog would have been too unbelievable.
Founded by 5th grader, lol , what BS. But whatever gets you in the press huh?
Interesting move by Hi5. For a split second I read it as PlaySpa(m)
HELLO? This is news? Tencent corp. has been selling virtual goods in China for years and operates the most profitable ($1 billion USD revenue in 2008) and the largest social network on earth (200 million active users in 01/2009 under QZone).
The US market is dead. The real action is in China!
Selling virtual goods to relatively poor people in developing nations will significantly negatively impact the economy of those countries. It basically sucks currency out of these countries and gives it to US-based start ups (backed by wealthy VCs) without any local presence.
At least when people in Peru buy a Coke, the local merchant, bottler, advertisers, etc get a piece of the transaction. With virtual goods, none of the transaction goes back into the local economy.
hi5 (and other virtual good providers) are bascially the anti-Kiva, which actually does good things by offering loans from relatively wealthy people to people in developing nations to help them grow their business.
Hopefully the residents of the developing nations in which hi5 is supposedly strong will resist the temptation to waste their precious disposable income on virtual crap and spend locally instead.
what a retard
You have got to be kidding me. “The anti-Kiva”?!?!
You really think people will be surfing hi5 from their mudhuts in the bush?!?
Get a life you fascist.
zin_fan? Howard Zinn? figures you communist.
Wikipedia says: “Fascism is a radical, authoritarian and nationalist ideology. Fascists advocate the creation of a single-party state. Fascists believe that nations and races are in perpetual conflict whereby only the strong can survive by being healthy, vital, and by asserting themselves in combat against the weak. Fascist governments forbid and suppress all criticism and opposition to the government and the fascist movement.”
Wondering who’s fascist here. Can people have a minimum of respect for other points of view?
Thanks Zin_Fan for your very relevant comments.
Why is this worthy of a post? So Hi-5 added another payment method to the many others they already accept. I can understand why a start-up wants to spin this as news, but it’s just a non-event corporate press release and TC took the bait.
I won’t bother commenting on the 5th grader nonsense. Good lord, did professional VCs put money into this thing?
Noone seems to care about hi5 besides techcrunch. Seriously, do they pay you? It’s a pile of crap.