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Facebook App Center officially opens for business

June 07, 2012|By Jessica Guynn
  • Facebook opens App Center.
Facebook opens App Center. (Facebook )

Facebook has officially swung open the doors of its new storefront to make it easier to find apps your friends are using.

It's Facebook's latest effort to make more money from its huge audience as investors impatiently wring their hands over slowing revenue growth at the world’s most popular online hangout.

The more time users spend and the more things they do on Facebook, the more personal information the social network can collect to target advertising to users.

Facebook makes most of its revenue from online ads, but it also collects fees when users buy digital goods inside games such as Zynga's FarmVille that use its Facebook Credits payment system.

All of the apps in the initial launch are free. Facebook plans to add paid apps later.

The apps store began rolling out to some users in the United States on Thursday night. Called the App Center, it can be reached via Facebook apps for Apple and Android devices, or on the website by clicking on a link in the upper left-hand corner of Facebook.com. It’s launching with more than 600 social apps such as Nike+ GPS, Draw Something and Pinterest.

Facebook users will see different apps in their App Center based on the apps they or their friends use and how much Facebook users engage with them.

Facebook first announced that it planned to open the App Center in May ahead of its initial public stock offering. The IPO's dismal performance has dragged down tech stocks and valuations of other companies on the secondary markets.

"Facebook is a growth engine and the App Center is another addition to that growth engine," said Doug Purdy, Facebook’s director of developer products, during a media event in San Francisco.

Apps such as social games and music services are popular with Facebook's more than 900 million users but are often hard to find. This gives apps a central place where users can find them.

"We know that social recommendations from our peer network and people we trust are as important for the apps that we download as they are for the products we buy," said Noah Elkin, EMarketer’s principal analyst for mobile. "Facebook is obviously huge in terms of its scale and number of users. It will very quickly become a very important player in the recommendation game."

Late last year a couple of engineers began building the App Center to help users find social apps, said Matt Wyndowe, Facebook’s product manager of apps and games.

This is a potential moneymaker for Facebook. More than 230 million people play games on Facebook every month, the company said. More than 130 games on Facebook have more than 1 million monthly active users.

Facebook said it sent users to the Apple App Store 83 million times and to iOS apps 134 million times in May. As of May, seven of the 10 highest grossing iOS apps and six of the top 10 Android apps have integrated with Facebook.

"Facebook is in a unique position as a platform owner to leverage their knowledge of their connections and behavior make the discovery process more effective," Gartner Research analyst Ray Valdes said.

Unhappy investors who have gritted their teeth while the stock has plunged are looking for Facebook to push aggressively into mobile advertising. Facebook said Tuesday that marketers can now buy mobile-only "sponsored stories," so far the company's only mobile ad product. "Sponsored stories" let marketers republish favorable messages that users post about their brands.

"Facebook is going to try a lot of things. Some things will work, some things won’t," said Brian Wieser, an analyst with Pivotal Research Group.

Analysts say Facebook won't see any immediate boost from the apps store.

“It will probably be two years before it becomes something that’s essential and before it becomes something everybody knows about,” Wedbush Securities analyst Michael Pachter said.

He estimated that the App Center would generate revenue in a year and significant revenue in two years.

“The killer app on Apple is iTunes,” Pachter said. “There is no reason that Facebook shouldn’t be able to compete with that.”

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