Virtual goods firm PlaySpan expands into making money via video micropayments

Now that micropayments have made a big splash in video games, where gamers have shown they’re willing to buy items such as weapons for a small chunk of change, virtual goods firm PlaySpan is enabling micropayments for pay-per-view videos. It reminds me of the old nickelodeon days, when you put a nickel in a machine to watch a video.

PlaySpan is launching its PriceYourVideo platform, which allows video publishers to set per-view prices for their videos. The video makers can upload their videos to the existing PlaySpan Marketplace, which is currently a destination site for those who want to buy virtual goods in online games. The video makers can price their video using PlaySpan’s virtual currency. You might, for instance, let a viewer watch three minutes of a video program for free and then prompt them to pay 10 UltimatePoints, which is PlaySpan’s virtual currency. The virtual currency can be purchased with real money, or awarded in some kind of marketing program.

It’s an interesting scheme that could help video makers of all kinds figure out one of the toughest problems: how to make money from video on the web. Here’s a sample of Diggnation videos using the platform. Many of the videos are priced at 10 UltimatePoints, or 10 cents.

“We believe the headlines will read something like “Teenage Vlogger Earns Over $50,000 From 150,000 Views of Skateboarding Tricks on PlaySpan Marketplace”. “It’s going to be game changing,” said Karl Mehta, chief executive of San Jose, Calif.-based PlaySpan. “Just like monetization of games has experienced tremendous growth away from an advertising supported revenue model to a direct pay model, we believe the video industry is poised for the same massive growth in user micro consumption of paid video content.”

Mehta said in an interview that the company worked on the technology for about a year as it contemplated how to generate better revenue streams for internet video, which has been hard to make money from. PlaySpan had to make the technology work with hundreds of video players and figure out how to lock and unlock the content.

Video publishers are already using the PlaySpan platform. Partners include Diggnation, Chad Vader, and Turbo Dates. PlaySpan already has a large audience for PlaySpan Marketplace, since gamers are coming to the site by the millions. Making money via micropayments could lead to bigger audiences. There are a lot of users who don’t have credit cards. But they can purchase PlaySpan’s virtual currency cards in stores, using cash. PlaySpan gets a fee for every transaction.

“Kids have cash, so virtual currency is an ideal way for them to consume these pieces of snackable entertainment in an impulsive way,” said Rob Polonsky, creator and producer of the video show Chad, Matt & Rob.

PlaySpan provides an option to donate proceeds to charity. Jim Louderback, chief executive of Revision3, says his company will be one of the first content publishers on PlaySpan Marketplace, since PlaySpan’s gamer audience is a perfect match for the demographic group that watches Revision3 shows such as Diggnation. PlaySpan provides its virtual goods platform for more than 1,000 online games, social networks and virtual worlds.

PlaySpan has more than 150 employees and has raised $24 million in funding to date. Investors include Easton Capital, Menlo Ventures, STIC and Novel TMT Ventures.