Scamville: The Social Gaming Ecosystem Of Hell
Last weekend I wrote about how the big social gaming companies are making hundreds of millions of dollars in revenue on Facebook and MySpace through games like Farmville and Mobsters. Major media can't stop applauding the companies long enough …
Context & Ripple Effects
Social gaming has been framed all year as a recession-proof gold rush: Business Week reported in April how games were scoring through the downturn (Social Gaming Scores in the Recession), and by March some indie Facebook developers were already pulling in over $700,000 a month ($700,000 a month). TechCrunch itself chronicled that boom before turning on it.
Scamville is the correction to that applause. Arrington's argument targets the 'special offers' layer — mobile subscription traps and lead-gen scams — sitting between FarmVille-scale hits and their hundreds of millions in revenue, while major media keeps celebrating the sector. How far the fight traveled is visible in the pickups: Offerpal's own blog and VentureBeat's video of the on-stage Arrington–Shukla clash put the monetization question in front of the whole industry.
First-order effects
- Zynga and other big social gaming publishers face immediate reputational pressure over offer-wall monetization, with Offerpal — the named offer provider — forced to defend its business publicly rather than quietly process leads.
- Facebook and MySpace now have a trust problem attached to their fastest-growing revenue category: the apps generating hundreds of millions are the same ones being called scams.
Second-order effects
- Publishers dependent on offers have an incentive to pivot toward direct-payment virtual goods, where the user knowingly pays, making clean checkout a competitive differentiator against rivals still leaning on lead-gen.
- The platform operators gain leverage: if scam complaints threaten user trust at scale, Facebook and MySpace can demand stricter app-monetization standards without losing the games that drive engagement.
Third-order effects
- If the pattern holds, the virtual goods economy gets professionalized — third-party offer networks either clean up or get squeezed out as platforms impose standards on the monetization layer they host.
- The episode marks the moment social gaming stops being covered purely as a growth story, forcing investors and acquirers to price compliance risk into valuations of offer-dependent companies.
The trend: Social gaming's monetization is being pushed from opaque lead-generation offers toward transparent direct payments, with platform owners and press scrutiny setting the cleanup cadence.