Virtual Goods News

Early this year the writing was on the wall for social networks. Advertising revenue was expected to fall as a result of the downturn and it was expected that most major networks would be implementing or enhancing their virtual goods offerings so that revenue stream could help make up the difference. We've seen moves by most of the major social networks to either emphasize or outright add virtual goods to their services over the past few months, but those moves may well have happened too late. Over the past few weeks half of the big six networks - the top three, in fact - have been afflicted by either executive trouble or outright layoffs.   

Probably the worst news in the social network scene was confirmation of another round of layoffs at Hi5 after a $30 million funding round the company was seeking fell through at the last minute. It is not yet known exactly how many employees Hi5 will be forced to let go, but sources confirmed to VentureBeat that the number is roughly 50% of Hi5's current staff of 100 people. The company already weathered a lighter round of layoffs in October that cut about 13% of its then-current workforce.

It is perhaps not coincidental that most of Hi5's recent round announcements related to virtual goods came after that first round of layoffs. Over the period of just a few months, Hi5 has rolled out virtual gifting, a gaming service that rewards users with virtual currency