Did Amazon just spend $50M+ to promote Amazon Coins?

Amazon just unveiled new virtual currency by giving every Kindle Fire owner $5 in Amazon Coins

In case you were sitting around at Mother’s Day brunch yesterday, drinking your fifth mimosa and thinking, “what we really need is another virtual currency,” you’re in luck—because that’s exactly what Amazon is going to give you! Our benevolent e-commerce overlord announced Monday that it has deposited $5 worth of “Amazon Coins” into every Kindle Fire owner’s account.

Yay! Now you can buy five $1 Kindle Books! Or rent one movie on Prime! Or buy one toothbrush on Amazon.com! Oh—no, you can’t. (Sorry if I got your hopes up about getting a new toothbrush.)

Amazon clarified in its announcement that Amazon Coins are currently usable for games and in-app purchases only—for the time being. On the surface, it looks like Amazon is simply trying to attract more developers with the promise of increased traffic and monetization. But there could be longer-term implications at play.

In one letter posted on Amazon’s site (it’s since been tweaked), the company said that $5 worth of coins is the equivalent of “tens of millions of dollars” in coin value. The blurring of the line between the values of a customer’s real money and virtual money makes it easier for that customer to spend more and lose track of how much real money he/she’s actually spending.

If Amazon decides to extend Amazon Coins to cover purchases like content, the company could potentially see a surge in consumer spending—especially considering the fact that it’s a dedicated currency. Once a customer purchases Amazon Coins, they can only redeem them for Amazon’s products.

Of course, in the meantime, Amazon is spending hella real money promoting the new virtual currency. Horace Dediu of Asymco estimated last August that some five million Kindle Fires were sold in the first nine months after its release in fall 2011. If Amazon has continued to sell Kindle Fires at the same rate, that would put it at a minimum of 10 million sold to date.

So assuming Amazon has 10 million Kindle Fire owners (the number is no doubt larger than this), then it just gave more than $50 million of free money to its developers.

“Today we are giving Kindle Fire owners $5 worth of Coins to spend on new apps and games, or to purchase in-app items, such as recipes in iCookbook, song collections in SongPop or mighty falcon bundles in Angry Birds Star Wars. And with discounts of up to 10% when you buy Coins, this is a great way for customers to save money when they buy apps, games and in-app items,” said Mike George, Amazon’s VP of Apps and Games, in a statement. “We will continue to add more ways to earn and spend Coins on a wider range of content and activities—today is Day One for Coins.”