The Economic Impact of Facebook’s App Economy
Posted by Cheryl Morris
The headlines are based on a study, The Facebook App Economy, which was published by the Center for Digital Innovation, Technology and Strategy (DIGITS) at the University of Maryland. The professors conducting the study in fact interviewed us at Nanigans in their research, with the goal of understanding and measuring the impact the Facebook Platform has had on the US economy.
The Economic Impact
As teased in the headlines above, they unearthed some striking results. The professors calculated three things: (1) employment in the App industry, (2) employment generated as a result of the App industry in other sectors, and (3) the economic value produced as a result of these jobs (the wages and benefits paid to these employees):
- 53,434: Jobs created in the App industry as a direct result of the Facebook platform
- 129,310 – 182,210: Range of jobs created outside the App industry (depends on the employment multiplier used)
- $12.19 billion – $15.71 billion: Range of economic value created as a result of these jobs
These numbers are just the direct result of Apps built on the Facebook Platform — they do not include any value generated by social plugins, Pages, Facebook Connect, advertising and otherwise. And what’s perhaps most stunning is that this study’s findings represent only the US. Can you imagine if it reflected Facebook’s truly global presence, where over 75% of Facebook users live?
Check out the video below with Il Horn Hann, one of the study’s authors, who discusses the findings:
The Rise of Social Gaming
Social gaming companies, one of the core set of Facebook developers leveraging our Ad Engine platform, are much of the focus of the study. We couldn’t resist relaying some of their impressive numbers highlighted in this study:
- Zynga: 2,000 employees and an estimated valuation of $15-20 billion
- Playfish: acquired by Electronic Arts for $300 million in 2009
- Playdom: acquired by Disney for $763 million in 2010
From Platform Inception to This Year’s f8
Facebook unveiled its Platform in May 2007. At the time, the social network had 20 million users — a tiny fraction (1/40th, to be exact) of the 800 million active users that now frequent the social network. More than 7 million Apps and websites have integrated with the Platform since its inception, and a whopping 20 million Apps are installed every day by people like you and me. And with Facebook’s latest Open Graph announcements at this year’s f8, these numbers are going nowhere but dramatically up.
We look forward to continuing to play a role in the “Facebook app economy,” and close to home at our headquarters in Boston, adding more jobs and value to the Massachusetts economy.