Facebook's Decision To Shutter Gift Shop Virtually Incomprehensible

Say goodbye to those virtual birthday hat-wearing dogs and poignant emoticons, because, come August 1, Facebook plans to shut down its virtual gift shop. Why do such a thing when the shop is still reportedly generating tens of millions of dollars a year?

"Apparently more can be generated with the small gifts team working on other projects," writes All Facebook. What's more, "The rise of FarmVille and the social gaming ecosystem on Facebook has driven virtual goods transactions away from Facebook's core gift shop."

"Closing the Gift Shop may disappoint many of the people ... but we made the decision after careful thought about where we need to focus our product development efforts," explains Jared Morgenstern, Facebook's product manager for games and credits wrote, in a blog post. "We'll be able to focus more on improving and enhancing products and features that people use every day, such as Photos, News Feed, Inbox, games, comments, the 'Like' button and the Wall."

"It makes sense for Facebook to trim away products that are adding clutter to the site, but these are pure profit and it's hard to imagine they were draining too many resources," notes TechCrunch.

"Good riddance to virtual junk," writes an unsentimental ReadWriteWeb. "Whether it's a box of chocolates that you can't actually taste or a teddy bear you can't squeeze, you'll have to satiate all of your virtual cravings over the coming weeks because, come August 1st, these imaginary offerings will be no more."

As recently as 2008, Facebook said it was generated $35 million a year from the shop. While "pushing the limits on the value of future virtual goods cash flows," All Facebook predicts that shop could now be generating as much $100 million a year.

Also according to All Facebook, the virtual goods marketplace is projected to $10 billion worldwide, this year.

Yet, "Facebook was never seemingly able to get its direct-to-consumer virtual goods business over the hump," according to Inside Facebook. "While other niche social sites have increased virtual gift monetization by integrating gift content more heavily into the user experience, Facebook has kept integration to a relative minimum."

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