We just wrote about PlaySpan’s recent study showing positive growth in the exchange and e-commerce of virtual goods exchange. PlaySpan powers micro-payments across over 1,000 video games and virtual worlds and has virtual goods storefronts on Facebook, MySpace, within games and on its standalone site. Today, PlaySpan is announcing a fairly significant deal with Nickelodeon to power payment services for virtual goods and microtransactions for the Nickelodeon Kids and Family Virtual Worlds Group.

PlaySpan’s technology and services will power Nickelodeon’s virtual worlds’ currency, called NeoCash, across multiple payment providers including credit cards and prepaid cards. Through PlaySpan’s subsidiary PayByCash, Nickelodeon will offer users over 80 global payment methods.

This is a big move for PlaySpan, considering Nickelodeon’s vast reach and popular games, including virtual world NeoPets, which has a user base of 45 million gamers. PlaySpan recently acquired micro-transaction app developer Spare Change, which powered micropayments across 700 social networking apps on Facebook, MySpace, and Bebo. Earlier this year, PlaySpan also made deal to power micropayments on hi5.

Micropayments are huge these days and the number of players are scaling quickly. With continued expansion on social networks, media properties and virtual worlds, startup PlaySpan has become a player in an arena where bigger players like PayPal, Facebook and MySpace are all investing in. In fact, PayPal’s new API powers micropayments. The competition may be stiff but as micropayments for virtual goods continue to gain traction in virtual worlds and integrate with consumers’ social graphs, there is definite potential for both startups like PlaySpan, Live Gamer and Zuora, and the more established players to play in the same pool.

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Virtual goods are booming and there are various startups who are capitalizing on this growth by facilitating the exchange and e-commerce around these goods. PlaySpan, which powers micro-payments across over 1,000 video games and virtual worlds, has virtual goods storefronts on Facebook, MySpace, within games and on its standalone site.

The marketplace lets users sell, exchange and purchase online game items, virtual goods, and game currencies for online games and applications. Today, PlaySpan is releasing a study in conjunction with research firm VGMarket, which reveals interesting statistics about consumer behavior with virtual goods.

The survey collected responses from 2,425 customers across the PlaySpan Marketplace, Spare Change, and Ultimate Game Card (other PlaySpan properties). According to the report, 31% of the total number of respondents said they have sold digital goods and 39% of the remaining 69% of respondents, expressed that they are either interested or very interested in doing so. In-Game Virtual Currency is the most frequently sold digital good from player to player and two out of three sellers sold in-game currency in the last 12 months, earning a median of $22 (U.S.).

Of course, it’s important to note that the cross section of people surveyed are obviously interested in virtual goods, since they are PlaySpan customers. But the fact that a third of digital goods buyers reported that they also sold goods is promising for the virtual goods marketplace space. I’d be interested to see why the individuals who didn’t sell digital goods but were interested in doing so haven’t yet participated on the selling side.

PlaySpan, which recently acquired micro-transaction app developer Spare Change, has processed more than $50 million worth of micro-transactions through its PayByCash and Ultimate Game Card products. PlaySpan also raised $16.8 million in a series B funding last Fall from Easton Capital Group, Menlo Ventures, Novel TMT Ventures, and STIC. The startup was founded by a 12-year-old, Arjun Mehta, but it is actually run by his father, CEO and co-founder Karl Mehta. PlaySpan faces competition from Live Gamer, which we recently wrote about here.

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Live Gamer, an online marketplace for players to trade and buy video game virtual goods, has acquired microtransaction platform Twofish, in an effort to boost its virtual economy. The terms of the acquisition were not disclosed. In conjunction with game makers, Live Gamer’s platform lets online game players trade virtual goods they earn in games. The company’s latest move makes sense—as micropayments in the gaming world heat up, gaming marketplaces need to power their virtual commerce platforms.

Twofish is a startup that basically powers micro-transaction systems for gaming companies. The company’s flagship product, Twofish Elements, provides several layers of service. The first is an accounting and currency management system that takes care of a game’s virtual currency and its relation to real currency. The second is a catalog of virtual items that can be bought within a particular game. And the third is an analytics tool that lets publishers track the goods being bought within their games.

Live Gamer, which was founded in 2007, is looking to be an all-in-one marketplace for publishers to allow users to buy and sell virtual gaming goods. The company also recently acquired Korean startup N-Cash, a global microtransaction company. Clearly, Live Gamer is looking towards micropayments as the future of virtual gaming and is creating a powerful payments platform and economy within its marketplace.

Mitch Davis, CEO of Live Gamer, told us that the gaming publishers are demanding total commerce solutions and with microtransactions becoming the common payments system, these acquisitions help round out the company and keep a competitive advantage. Competitors to Live Gamer include PlaySpan (which also made a recent acquisition of a micropayments startup).

As we’ve said in the past, micropayments are hot these days, and the number of players are scaling quickly, especially as gaming and social networks intersect. Live Gamer, PlaySpan and other smaller startups are wise to boost their offerings as bigger players like PayPal, Facebook and MySpace consider making a move in the space.

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Micro-payments across the gaming world is gaining serious traction, especially on social networks. PlaySpan, which powers micro-payments across over 1,000 video games and virtual worlds, is launching marketplace storefronts for Facebook and MySpace (which will be rolled out soon). The marketplace will which let users purchase online game items, virtual goods, and game currencies for online games and applications directly from their social networks.

What makes the marketplace interesting is that you can buy, trade, and sell goods within the marketplaces on Facebook and MySpace and then use the items in online game environments. And making a transaction on the marketplace becomes a whole lot more social, as your friends may be able to see it on your NewsFeed. PlaySpan, which recently acquired micro-transaction app developer Spare Change, has processed more than $50 million worth of micro-transactions through its PayByCash and Ultimate Game Card products. PlaySpan also raised $16.8 million in a series B funding last Fall from Easton Capital Group, Menlo Ventures, Novel TMT Ventures, and STIC. The startup was founded by a 12-year-old, Arjun Mehta, but it is actually run by his father, CEO and co-founder Karl Mehta.

The recent acquisition of Spare Change now makes sense. While PlaySpan’s focus so far has been within games and virtual worlds, it made a recent deal to power micropayments on hi5. Spare Change, on the other hand, powered micropayments across 700 social networking apps on Facebook, MySpace, and Bebo, and at the time of its acquisition was on its way to processing $30 million worth of transactions this year.

It seems like these days everyone is getting into micropayments, and the number of players are scaling quickly. With continued expansion on social networks, startup PlaySpan can become a serious player in a space where bigger players like PayPal, Facebook and MySpace are all considering making a move. The competition may be stiff but as micropayments start to integrate with consumers’ social graphs, but there seems to be the potential for more than enough opportunity for both startups like PlaySpan and Zuora, and the more established players.

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This is very similar to what PlaySpan is up to with its Ultimate Game Card. For more perspective on their product, read about their recent deal with hi5 or their acquisition of Spare Change.

According to the press release, the Zeevex Digital Lockers will include social network plug-ins (for Facebook, Twitter, MySpace and Bebo) so users can trade Zeev Tokens with anyone but also provide parental controls and support for micro-transactions as low as 5 cents.

Zeevex recently closed an undisclosed, private round of funding and is led by Ron Williams (CEO), Dean Gebert (CMO) and Robert Sanders (CTO). While the company would not go into detail on the financing round, it did say its seed round valuation was seven figures and that they are considering a VC-backed Series A round this Summer.

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The micro-industry forming around micro-transactions is now going through some micro-consolidation. PlaySpan, which is quickly racking up micro-payments across hundreds of video games and virtual worlds, is acquiring Spare Change Payments, a startup which focuses on micro-transactions for social networking apps. The value of the cash-and-stock deal was not disclosed.

PlaySpan raised $16.8 million in a series B funding just last February from Easton Capital Group, Menlo Ventures, Novel TMT Ventures, and STIC. The startup was famously founded by a 12-year-old, Arjun Mehta, but it is really run by his father, CEO and co-founder Karl Mehta.

The company has processed more than $50 million worth of micro-transactions through its PayByCash and Ultimate Game Card products. While its focus so far has been games and virtual worlds, it recently began making its own forays into social networks with a deal to power some micropayments on hi5. But Spare Change already has more momentum on social networks. It powers micropayments across 700 social networking apps on Facebook, MySpace, and Bebo, and is on its way to processing $30 million worth of transactions this year. As the social networks and online games collide, and developers seek new ways to make money other than advertising, micropayments will continue to grow.

Like any payments business, even micro-transactions are all about scale. The bigger PlaySpan can get before the giants finally wake up and enter the market seriously, the better chance it has to becoming the PayPal of micropayments. Of course, PayPal, Facebook and MySpace all have their own plans to become the PayPal of micropayments. And plenty of other startups, from Zuora to Zong, are vying for the title as well.

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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.

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Who says raising money is hard these days? PlaySpan makes it look like child’s play. The startup, which was literally founded by a 5th grader, just raised $16.8 million in a series B round from existing investors Easton Capital Group, Menlo Ventures, Novel TMT Ventures, and STIC.

PlaySpan was founded two years ago by Arjun Mehta, then in the 5th grade, and his father Karl Mehta, who is the CEO. It is a marketplace and micro-transaction payment system for virtual goods in more than 200 different video games. So far this year, more than $50 million worth of transactions have gone through PlaySpan, and the company has reaped revenues in the millions of dollars.

The company also sells the Ultimate Game Card through 20,000 retailers, including 7-Eleven, Wal-Mart, Blockbuster, and Rite-Aid. With the stored-value card, players can purchase virtual goods in hundreds more video games, including Everquest, Eve Online, and all EA Games.

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PlaySpan hasn’t launched yet, but is promising a product that will attempt to be an official commerce provider for multiple MMOGs. According to PlaySpan, the company has already signed up seven MMOG partners

The interesting side of PlaySpan is with the background story: PlaySpan was founded by Arjun Mehta (pictured) , a 6th grader from Silicon Valley who founded the company from money earned selling online game items won from quests he fought while attending 5th grade at Challenger School in San Jose.

No word on when PlaySpan will be launching.

(via Metaversed)

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