Payment platform PlaySpan raises $18 million

Vodafone Ventures, Softbank Bodhi Fund and existing investors back virtual goods player

The market to process the billions of virtual goods purchases on social networks, social games and virtual worlds is heating up.

PlaySpan, a monetization platform for online games and social networks, raised $18 million in funding from investors Vodafone Ventures, Softbank Bodhi Fund, and existing investors Menlo Ventures, STIC International, and Novel TMT Ventures, boosting the company’s total funding to $42 million since its founding in 2006. The company plans to use the money to expand to Europe and Asia.

The Santa Clara, Calif-based startup is among the many companies, such as Zong and Boku, taking advantage of the explosive popularity of digital goods. Last month, PlaySpan expanded its offering by allowing publishers to charge micro-payments for videos.

PlaySpan works with more than 1000 online games, social networks, and virtual world services, as well as leading media companies, such as Disney and Nickelodeon, to handle the monetization of virtual and digital goods purchases on their platforms. It's also scored some high-profile deals in the past, such its partnership with Snoop Dogg, and branded virtual goods agency Virtual Greats, to sell a licensed virtual Snoop Dogg line. The rapper’s virtual goods will appear first in PlaySpan’s marketplace on the virtual world IMVU and will include hats, sunglasses, bikinis, musical instruments, DJ sets, and clothing, all priced at $2 and up. So, if you're on IMVU, you can probably buy a pair of Snoop Dogg's sunglasses to look cool.

Among the offerings provided by PlaySpan include UltimatePay, which incorporates over 85 payment methods through a simple and accessible user interface.  Through UltimatePay, users can expand their markets through Ultimate Game Card, the world’s first prepaid game card, and UltimatePoints, which provides for one-click in-game payments and handles transactions as small as $0.01.

Exploding virtual goods market

The market for virtual goods and virtual currency has experienced unprecedented growth in recent years due to the emergence of social networks like Facebook and Bebo, and the social games that grew out of those networks. 

Zynga, the largest social game publisher on the Web and the group from which Farmville emerged, draws more than 230 million unique users each month and accounts for more than half of the games played by Facebook users alone each month.  According to a 2009 digital goods study by PlaySpan and VGMarket Landmark, allowing players to earn virtual currency rather than pay for it directly is now a $720 million business and is projected to account for up to 20 percent of gaming revenue by 2011.  Zynga alone is expected to make approximately $1 billion this year.

While PlaySpan was not immediately available to comment, the company’s cofounder and CEO, Karl Mehta, has previously claimed that PlaySpan is adding 20 new partners each month and signed over 100 partners in 2010, placing them among the Inc. 500 Fastest Growing Companies.