E-commerce leviathan Amazon today is taking a step into social gaming: Amazon Coins, its new virtual currency, is now live in the U.S. To kick it off, Amazon announced that it would put $5 worth of the currency — equivalent to 500 Coins — into all Kindle Fire users’ accounts to use on apps and in-app purchases on its platform. The company says that this is equivalent to “tens of millions of dollars” worth of Amazon Coins.
Coins, which were first announced in February, are the company’s move into an area that has been a strong way for app publishers to generate revenue through their apps. In that sense, the launch serves a two-fold purpose for Amazon: a way of encouraging developers to come to its platform (something Amazon has already been working on), and to spur more revenue generation.
A lot of the talk in virtual currency of late has been around the potential for bitcoin and other new monetary instruments fuelled by a network effect. But before bitcoin became the buzz, there were already a number of other virtual currency networks run by Facebook, Zynga and many more, with aim being to spend the “money” on gaming and other apps on their platforms.
Unlike bitcoin, and more like Amazon Coins, most virtual currency is based on users redeeming standard currencies for “virtual” ones on the network in question. This money can then be used to buy new features in a game, or extend your life, or to send “virtual gifts” to friends. One idea here, I think, is that users are more likely to spend money when it’s less transparent that they are doing so; in Amazon’s case, 500 Coins sounds a lot more exciting than $5. Another is that it ties a user more closely in with a particular game and a particular platform. Amazon Coins will give Amazon a way of more reliably monetizing users longer-term.
Amazon Coins is an extension of other social services that Amazon has added to its app platform. Specifically, Game Connect lets developers list virtual goods for sale on Amazon.com — a way of also marketing those games themselves; and GameCircle is a kind of social network that lets users measure their achievements in games against their friends and other players. On top of that, Amazon also allos for in-app purchases using real-world money as well.
Amazon says that it will be offering discounts of 10% to those users who buy Coins in bulk. Developers will get a standard 70% revenue share on all coin spend.
This looks like it is just the beginning of Amazon Coins, which the company says will extend to other services on the platform — and likely outside of the U.S. over time, given that virtual currency has proven popular outside of the U.S. in markets like Asia and Europe.
“Today we are giving Kindle Fire owners $5 worth of Coins to spend on new apps and games, or to purchase in-app items, such as recipes in iCookbook, song collections in SongPop or mighty falcon bundles in Angry Birds Star Wars. And with discounts of up to 10% when you buy Coins, this is a great way for customers to save money when they buy apps, games and in-app items,” said Mike George, Vice President of Apps and Games at Amazon, in a statement. “We will continue to add more ways to earn and spend Coins on a wider range of content and activities—today is Day One for Coins.”
Whether that will ever include making purchases on Amazon.com with Amazon Coins remains to be seen — but it seems that in any case Amazon Coins will be one more way that Amazon will build out its e-commerce empire ever further.