Social gaming company Zynga has filed a patent application for virtual currency in online games. That’s right – the maker of Farmville and Mafia Wars is trying to patent the system that underpins the revenues of every social game company. So no prizes for guessing what’s keeping the intellectual property lawyers at Facebook, Disney, Electronic Arts and other social gaming companies busy right now.
The application is titled “Virtual Playing Chips in a Multiuser Online Game Network” and has the abstract: “In various embodiments, virtual currency is used within a multiplayer online game in a restricted manner”. There are 47 parts to the application and I don’t pretend to understand it all from either a technical or legal standpoint. I don’t know how specific the patent claim is – though as a general observation I would say that a lot of patents that are awarded these days are overly broad. If this is the case, then I think we can expect to see some sort of challenge from Zynga’s competitors or from Facebook itself. You can read the full text of Zynga’s patent application for yourself on the US Patent & Trademark Office site.
What I did pick up is that Zynga is applying for patents to cover both virtual currency for gambling-style games, such as its popular Texas HoldEm Poker, and for currency that is used to buy virtual goods, whether it is purchased or earned in the game. The application lists as an example that “a dragon fighting game might reward 10 gold coins each time a dragon is successfully slayed”.
Depending on how broad the patent actually is, Facebook stands to lose the most. Many social game makers have their own system for accepting payments for virtual currencies – but this has largely been replaced by Facebook Credits over the course of the past year. While social game companies might have a presence on MySpace or on their own website, for most developers the vast majority of their traffic is on Facebook and most of their transactions are now through Credits.
For Facebook the stakes are higher. The social networking site earns a 30% cut every time Credits are used to buy virtual goods in a game. With the burgeoning popularity of social games on Facebook, it would be a serious blow if it lost this growing source of revenue.
Now it might be that Zynga’s application covers a very specific method that is not used by Facebook or other social game companies. But if I were an IP lawyer for Facebook or one of Zynga’s rivals, I’d certainly be studying the fine print closely before letting this one past the gatekeeper.