Rise of Mobile Squeezes Facebook’s Payments Revenue (Aug. 4, 2015)
Amid Facebook’s better-than-expected, second-quarter earnings report last week, payments revenue fell 8.1 percent. The social media giant pulled in $215 million in payments revenue during the quarter—mostly from users buying virtual goods and games—down from $234 million during the second quarter of 2014. Facebook attributed the decline to the large-scale shift of consumers, who are using mobile devices rather than computers to access the social media site.
Popular Facebook-based games like Farmville are played mainly on computers. As users switch to accessing Facebook via mobile, they’re not playing those games, so the revenue they generate falls by the wayside. And with most popular social games now having their own separate mobile apps, users who do want to play them on mobile devices don’t have to go through Facebook to do so. In 2011, 12 percent of all Facebook revenue was generated by games—a figure that’s since dropped to 5 percent. The company expects the downward trend for payments to continue.
“We have experienced and expect to see the continued decline in usage of Facebook on personal computers for the foreseeable future, which we expect will result in a continuing decline in payments revenue,” the company said in its earnings filing.
But Facebook isn’t giving up on payments altogether. The company’s mobile P2P service, which launched throughout the U.S. earlier this summer, could be a potential source of future revenue—though Facebook doesn’t currently take a cut of transactions made via the service. And the shift toward mobile hasn’t been all bad for the company. Mobile advertising accounts for more than 75 percent of Facebook’s ad revenue, and virtually all of its revenue growth since going public three years ago has come from its mobile ad business.