As Facebook prepares for its initial public offering in a few weeks, it has just announced plans for its own App Center. The center will allow the online service with over 900 million members to generate new forms of revenue and add an additional social dimension to the popular online platform.
When released in a few weeks, the App Center will feature apps created specifically for the Facebook platform — where consumers will use Facebook Credits for their purchases. The center will provide links to other app stores housing off platform services such as Spotify and Pintrest, or to apps that require special download and installation.
Analysts consider the App Center to be a canny move for Facebook. Although Facebook collects fees from advertising, ad revenue growth is slowing due to increased access of the service on smartphones where Facebook has limited penetration of ads.
While Facebook does collect some revenue from goods purchased from within certain apps via its Facebook Credits program, the main form of revenue is still the traditional ad model.
Facebook is hoping a dedicated App Center will encourage developers to create more custom Facebook applications where they share 30 percent of the purchase price with the social network. There is also the hope that the in app purchases with Facebook Credits will continue to rise.
Although shoring up the company coffers is key prior to a public offering, the Facebook App Center is also considered smart social strategy. Based on Facebook's extensive social usage data and open graph, it will be able to customize the store's experience for each user as well as provide top quality games.
Facebook will use information such as how often and how long a user plays a certain kind of game to customize the interface of each user's storefront to give them the most relevant offerings based on their interests. Each user will see something different.
Plus, this usage information will help Facebook provide only the most popular apps to their consumers. In addition to consumers giving their own ratings, the data on user engagement will also count.
Facebook engineer Aaron Brady explained via the company blog:
"Success through the App Center is tied to the quality of an app. We use a variety of signals, such as user ratings and engagement, to determine if an app is listed in the App Center. To help you [developers] monitor user feedback, we are also introducing a new app ratings metric in Insights to report how users rate your app over time. Well-designed apps that people enjoy will be prominently displayed. Apps that receive poor user ratings or don't meet the quality guidelines won't be listed."
Between raising the potential for new revenue and providing users with new ways to stay further engaged on the number one social network, Facebook is positioning itself well for both it's fan base and Wall Street.