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Amazon to hand out some serious coin

Amazon announced their new virtual currency, to be called Amazon Coins earlier today. Coins can be used to purchase apps, games and in-app items for Kindle Fire. They also pledge to give away “tens of millions” worth of the coins starting in May when the new service/product launches. See Introducing Amazon Coins.

I think it is smart for Amazon to provide another way to ease the purchase of content in the Kindle Fire ecosystem. Also, I imagine that they will give Coins away with purchases of Kindles and probably with lots of other goods, too. It will be interesting to see where Amazon ultimately goes with this, but here are some of my initial ideas.

Fire Halo Effect
I could see a small kick-back on purchases whether you have a Kindle or not. Soon enough, you’re going to want to have a Kindle so that you can cash in all of your earned Coins. Could be a serious draw for the ecosystem. I know that I spend a fair amount annually with Amazon. If they give me a small percent of credit toward virtual goods on their platform, it could make that seem more attractive.

Coins Aren’t Real Money
I also believe that they will make it easy to buy Amazon Coins or give them as gifts or in-app incentives. Once real money is translated to Coins, Amazon wins! You will spend it at Amazon on virtual goods giving Amazon an easy 30% commission. Also, you’re likely to have some residual coins drawing you back to add or earn some more. Finally, it seems much easier to spend virtual credits than real dollars and cents.

Kindle Everywhere
Could it also be a way to create more loyalty to their virtual goods over time. I wouldn’t be surprised to see Amazon Coins accepted for Kindle Books or AmazonMP3 to be read and played on other devices, like Android phones and tablets or Apple iDevices. Could be a great way to create lock-in for their virtual marketplace. This would build loyalty toward their marketplace and not just the Fire device portfolio. Amazon’s devices have been created to support their “Long Tail” marketplace, not the other way around.

Drop Some Coin for Anything
Another obvious extension of this would be to allow Coins as payment for all kinds of goods. Want something shipped to your house? Amazon Coins could be a great way to get me to choose Amazon for real-world goods also.

What Did Facebook Miss?
Before I close, it’s worth noting that Facebook failed in their attempt to create a virtual currency for their apps and games. They ultimately abandoned Facebook Credits and just returned to national currencies. This may partly explain why Amazon has defined Coins narrowly for now and will offer only in the USA market at launch.

I wish them luck and can’t wait to see how this develops. Any other ideas or thoughts? Comment below!

See also: http://www.theverge.com/2013/2/5/3955202/why-amazon-wants-its-own-currency

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